Wholesale gas prices in Australia’s east coast market have fallen by as much as 50% following Malcolm Turnbull’s threats to restrict major LNG plants from exporting gas if the domestic market was not properly served.
The latest gas market update from the Australian Competition & Consumer Commission states prices offered to large commercial and industrial users have dropped from a peak of $16 per gigajoule in early 2017, to a range of $8 to $12 a gigajoule since July 2017.
According to the watchdog, LNG producers have contracted 42 petajoules of gas under long-term deals for supply in 2018, and have cut into their exports to make this happen.
The development follows Prime Minister Malcolm Turnbull midway through the year leading the charge to secure Australian gas for domestic users at as low a price as possible.
Despite the gas price moving in the right direction, ACCC chairman Rod Sims says prices are still too high, however.
“Despite increased supply providing important short-term improvements in conditions, the market is still not operating as well as it could,” Sims said on December 12.
“Prices remain higher than they would be in a well-functioning and competitive market.”
The ACCC says the picture for smaller commercial and industrial gas buyers “remains bleak,” as they generally face higher prices than larger users with fewer competing offers.
“We are very concerned that retailers as a whole appear to be placing less importance on commercial and industrial gas users,” Sims said.
“The ACCC believes that recently agreed 2018 prices are at the upper end of, or above, the prices that would be likely in a well-functioning and competitive market.”
Sims said the watchdog will continue to “closely scrutinise” the market, as well as behaviour by retailers.