Attributable to Australian Energy Producers Chief Executive Samantha McCulloch

The Frontier Economics modelling of the Coalition’s gas price controls policy leaves many unanswered questions about how the policy would work and reaffirms industry’s fundamental concerns.

The policy would introduce price controls in the east coast gas market and would be yet another heavy-handed intervention that will drive away investment and risk exacerbating the supply pressures in the longer term.

The Coalition rightly opposed a similar policy in 2022, when the Federal Government introduced price caps that ultimately delayed new supply and damaged investor confidence.

At the time, the Coalition noted that “price caps in the gas market would be a disaster” that could lead to “a collapse in industry confidence resulting in job losses and long-term investment downturns”, and cited EnergyQuest modelling “that showed a $10-per-gigajoule cap could remove or delay more than 700 petajoules of new gas supply in less than eight years.”

Rather than increasing gas supply, the Coalition’s policy risks reducing domestic gas production and supply because there would be no incentive to produce sub-economic gas, and it would damage already suppressed investor confidence.

The modelling also ignores the material infrastructure constraints that limit how much gas from Queensland can be sent to the southern states, with the pipes already running at full capacity during peak periods – a point the Coalition made less than six months ago.

There is much in the Coalition’s broader gas plan that is welcome and responds to what industry has been calling for, including streamlining environmental approvals, providing more certainty and protection from lawfare for critical energy projects, including gas in the Capacity Investment Scheme, and support for pipeline and storage to address infrastructure constraints.

We will continue to work with both major parties on sustainable solutions that promote a functioning, competitive and well supplied east coast gas market.