The reason for rising gas prices is simple: too much is being sent overseas

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This was published 6 years ago

The reason for rising gas prices is simple: too much is being sent overseas

By Tim Pallas
Updated

There's been a lot of hot air coming from Canberra of late.

Amongst the constitutional chaos and the MPs dropping like flies it seems the things that really matter to Australians have been forgotten by Mr Turnbull and co.

Gas is just one example.

While Malcolm Turnbull revels in a sound bite, seeking to blame the states and territories for rising gas prices and shortages any chance he gets, the truth is not as simple.

Fracking protesters outside AGL's annual general meeting in Melbourne in September, 2015.

Fracking protesters outside AGL's annual general meeting in Melbourne in September, 2015. Credit: Pat Scala

Thanks to the Commonwealth's flawed energy policy, too much of our gas is being sent overseas. It means that it's actually cheaper to buy Australian gas in Japan than it is here in Australia.

That's absurd and irresponsible – but it doesn't have to be this way.

Already, Victoria's offshore waters produce approximately double the amount of gas we consume.

Our gas plants produce about 400 petajoules a year; we consume about 200 petajoules a year.

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It's actually cheaper to buy Australian gas in Japan than it is here in Australia.

It's actually cheaper to buy Australian gas in Japan than it is here in Australia.Credit: Woodside Petroleum

In the past, our surplus gas has been piped interstate to supply communities in New South Wales and South Australia.

Now, under this Federal Government, it is also being syphoned off to service foreign markets.

It means that all up, more than two-thirds of gas from Australia's east coast will be exported.

That's why when I attend my first COAG Energy Council meeting on Friday, I'll be pressing the Commonwealth to ensure sufficient gas is reserved for domestic use before being shipped off to overseas markets.

My argument is pretty simple.

Rather than making a short-term, sideline deal with the big gas exporters, the Prime Minister should ensure Australian gas is being used for Australian households and Australian businesses.

But of course, it's never Mr Turnbull's fault.

So desperate is he to pass the buck, now he's blaming our state's ban on fracking. He's even threatening to cut the amount of GST revenue we receive.

Even the Commonwealth's Productivity Commission has criticised this ill-considered notion as "an intentional breach of policy neutrality and State autonomy".

Let's be clear about why we banned fracking for onshore unconventional gas and the extraction of coal seam gas in Victoria.

We banned fracking to protect our valuable farming sector – a sector that earns around $13 billion a year in exports and employs around 190,000 people.

Fracking just wasn't worth the risk, particularly when we have other, better gas resources available.

And we're looking to find even more.

The Andrews Labor Government has allocated $42.5 million to deliver the Victorian Gas Program over the next three years.

It'll look at three aspects of new Victorian gas supply – onshore conventional gas resources, offshore gas and underground gas storage.

The onshore conventional gas study is the most complex part of the Victorian Gas Program.

Scientists from the Geological Survey of Victoria are gathering new geoscience and environmental field data to prepare a robust estimate of the potential conventional gas resources.

Onshore conventional gas is the type of underground natural gas that can be extracted without fracking.

It's being done under the watchful eye of Victoria's Lead Scientist, a stakeholder advisory panel, a scientific reference group and in close consultation with the community, interest groups and industry stakeholders.

It is also being conducted while a moratorium on onshore conventional gas exploration and development is in place.

The moratorium provides the time necessary for government, farmers and regional communities to understand the potential risks, benefits and impacts of onshore conventional gas – without a drill rig at the farm gate.

The Commonwealth Government claims that Victoria is sitting on oceans of gas, as much as 40 years' worth.

These claims stem from a desktop data review of onshore unconventional shale, tight and coal seam gas by Geoscience Australia, estimates which the agency itself warns are "preliminary", "subject to change" and come with "a high degree of uncertainty".

And extraction would require fracking, or drainage of groundwater.

The truth is, despite decades of commercial exploration, there are currently no proven or probable onshore gas reserves in Victoria.

This is a sizeable piece of the puzzle: how much onshore conventional gas do we have, where is it located, and how much of it could be safely tapped?

Science – not rhetoric – will give us the answers to these questions by June 2020. The results will help us make decisions about the future of onshore conventional gas.

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And importantly, it'll be based on fact, not guesswork.

Tim Pallas is the Victorian Treasurer and Minister for Resources.

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