18 September 2014
AWU begins blitz to lock up gas
The Australian Workers Union will launch a campaign to convince Australians that 15 per cent to 20 per cent of gas production should be set aside for domestic use, a move that could lower local prices but cut producers’ profits.
The union wants to harness public anger at surging gas prices in a “ground war” against gas exporters and big political parties opposed to export controls. It believes cheaper gas will protect more of its members’ jobs in manufacturing.
The AWU’s new national secretary, Scott McDine, said 15 per cent to 20 per cent of gas should be set aside at cheap prices to help local companies and households. A media campaign will begin in weeks.
In a related development, an Australian company, CoogeeChemicals, is considering building a big chemicals plant in the United States because gas prices are too high in Australia.
Methanol business manager Grant Lukey will this week travel to the US, where gas is cheap, to explore options for a $1 billion methanol plant.
Producers say the union’s plan is protectionist. James Baulderstone, Santos’s vice-president, Eastern Australia said making more gas available is the best way to lower prices. “Reserving the gas is the best way to keep it in the ground, restrict supply and increase prices,” he said.
A spokesman for Origin Energy said: “We believe the greatest economic benefits for Australia are realised by allowing all resources, including natural gas, to flow to their highest value use.”
Energy companies 'profiteering'
Mr McDine accused the energy companies of profiteering. “I accept that businesses want to be able to sell liquefied gas to the global market – they are going to amass huge profits,” he said.
“But why doesn’t Australia, like every other country with significant gas reserves, take the appropriate action to reserve gas for industry and the ordinary consumer?”
Gas bills for Victorian households could jump by $300 to $500 a year, and billions of dollars of investments are on ice because of looming gas price rises.
Coogee Energy, a unit of privately owned CoogeeChemicals of Perth, is considering joining Incitec Pivot to build a billion dollar plant in the US.
“We have not given up on Australia but our focus has shifted to the States because the gas equation has not become any easier. It has become harder,” Mr Lukey said.
German giant BASF has warned $1.5 billion of capital earmarked for Australia will not be spent if the gas squeeze is not resolved.
The AWU campaign will seek wide support, including from traditional enemies in industry and conservative political ranks.
The ACTU backs the campaign. “Australian workers have an enormous amount to lose from projected gas price rises from both an employment, and a cost of living, perspective,” ACTU President, Ged Kearney said.
“There should be far more awareness around this issue and we look forward to supporting the campaign to sound the alarm and push for change.”
Local market should be catered for
Manufacturing Australia executive director Ben Eade said it was probably too late to lock up gas being produced now but a percentage of new projects or expansions should be sold locally until there is enough supply for domestic and export use.
“Governments also need to support new entrants into the gas market, improve gas infrastructure and act to fix a highly dysfunctional gas market.If we don’t do that, more supply isn’t going to fix the problem,” he said.