Rising Energy Costs a Cause of Concern for Businesses

Article by: Hari Yellina

Businesses in Australia are warning that if a long-term strategy to reduce skyrocketing gas and power bills is not executed, they will fail. Australia is on the verge of a gas catastrophe, according to Energy Minister Chris Bowen, who has left all options on the table to combat rising gas and electricity prices, including a contentious “gas trigger” to requisition supplies of gas destined for export. Energy prices were already high due to rising international demand as countries around the world transition away from Russian gas and coal, but a severe cold spell, the collapse of a gas supplier last week, and problems with some coal plants in Australia have added to the pressure on domestic gas prices.

Jason Fritsch, CEO of Kagome in Victoria, the country’s largest tomato processing company, said something needs to be done quickly to bring costs down. “If gas costs stay where they are today, we’re all going to die,” he warned. “There will be no processing or manufacturing in Australia; it’s as simple as that – we can’t afford it at those prices.” “As a group, we’re quite concerned about where this is going to wind up in the next 12 months to two years,” says Kagome. “This is not just Kagome, but manufacturers, processors, and anyone who needs to use gas as an energy supply to perform what they’re doing.”

Price pressures were felt across all businesses, according to Energy Users Association CEO Andrew Richards, who warned that if nothing changed, prices will continue to be passed on to consumers. “These are the ones who manufacture food, beverages, paper, steel, and concrete. These are things that we require on a daily basis. And they’re all rising. And this has a big impact on the cost of life “he stated. “This isn’t a hypothetical exercise – it’s real, it’s not a drill, and it’s already biting hard at both the family and company levels.” The then-Turnbull administration announced legislation in 2017 that would empower the Commonwealth to compel gas producers to divert more of their supplies to the domestic market.

Mr Bowen, on the other hand, said that even if the government activated the so-called gas trigger right away, the additional supplies would not arrive until January. Before the policy could be implemented, it had to be discussed with the industry. According to Andrew Richards, the government should consider modifying the mechanism’s operation. “When they were building this, we made a lot of submissions.” You must link to the cost of gas, not merely the availability of gas. “You need to make sure it has a more immediate effect,” he explained. “These are the kinds of discussions we need to have with this new administration.” “Hello, guys! Welcome to government!” You’re dealing with the worst energy crisis in 50 years, so don’t put any pressure on yourself.”

Acting Chief Executive of the Australian Petroleum Production & Exploration Association, Damian Dwyer, stressed that new gas supply is necessary to put long-term downward pressure on prices. “More supply, not more control, is the solution,” he said in a statement. “Despite years of moratoriums, restrictions, and delays, we’re investing in more gas, but we need investment confidence.” Santos has spent more than $1 billion to get its new contentious project in Narrabri, New South Wales, up and going. The present gas scarcity has been leveraged by CEO Kevin Gallagher to highlight his intention to speed expansion. “We’ve got the most of the approvals in place, and we’re in the last stages of that,” he said.

“We won’t be able to complete it any faster; we’ll need government assistance.” He called the lack of new breakthroughs “frightening,” but Kelly O’Shanassy, CEO of the Australian Conservation Foundation, urged the new administration to focus on developing alternative forms of energy sources to meet market price challenges. “Renewable energy is the way of the future,” she stated. “Renewable energy is quick to build, lot cheaper and more accessible, and it’s far better for our climate,” she explained. A vow to expedite the transition to renewable energy was part of Labor’s election programme, but Mr Bowen has admitted that most of those plans will not help in the short term.

Mr Bowen stated, “The previous government did not do the work required to increase renewables and storage.” “We would be far better positioned to deal with the current issues if we had more storage, more renewables, and better transmission.” Energy ministers from the Commonwealth, states, and territories will meet early next week to consider alternative policy options for reducing price spikes during winter.