Why are gas prices changing?

As we move towards a lower emissions future, gas is Australia’s transition fuel for generating electricity.

Domestic gas prices in Australia are higher than in our export markets. This is not a situation that will deliver sustainable support for Australian households and gas dependent industries. This is a complex area but we do know that contributing factors for high domestic gas prices include increased demand for gas in electricity generation (due to closure of coal fired electricity plants like Hazelwood in Victoria) and lower than expected levels of gas production.

Other contributing factors include higher development and production costs for new gas resources, and bans, moratoria and regulatory uncertainty for onshore gas development in some states and territories. These factors have all contributed to tighter gas supply and higher domestic prices.

The Australian Government has also introduced the Australian Domestic Gas Security Mechanism, a system to restrict liquefied gas exports in specific circumstances to ensure there is a secure and adequate supply of gas available to meet Australian domestic needs. This mechanism will be used if a domestic shortfall is forecast by the Commonwealth Minster for Resources, in circumstances where gas exporters are drawing more supply from the domestic market than they are putting back in.

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