Major job losses if large-scale plants forced to close

There’s growing concern that if gas prices continue rising, industrial manufacturing plants on the east coast will be forced to close, resulting in massive job losses. According to Garbis Simonian of the NSW gas user and wholesaler Weston Energy, any rise above the present $10 a gigajoule level is unsustainable for industrial manufacturing.

There’s growing fear that the $10-a-gigajoule quoted by potential LNG importers (into the southern states) is the lowest prices are going to get. Adding to that fear, as Asian markets continue to tighten tariffs will move even higher.

Based on some estimates, the LNG spot price on Asian gas imports already exceeded $14, or $11.52/GJ for US gas.

Complaints by east coast manufacturers of spiralling energy costs are far from new, but there are mounting fears that some gas-based plants may have to close, given that a major spike in gas prices have compromised their business model. This has resulted on renewed pressure on the federal government to pull back on LNG exports from Queensland. The Australian Competition and Consumer Commission is expectant that LNG imports would at very least put a cap on the price of east coast gas.

While Queensland coal seam gas has helped to maintain some level of (higher priced) supply in Australia, the government has been stiffy criticised for allowing the sanctioning of the Queensland LNG export projects to inadvertently ‘shanghai’ east coast buyers to international prices.