ABC radio’s consumer affairs reporter Amy Bainbridge recently interviewed AGL’s Chief Economist Paul Simshauser about his company’s request of the NSW regulator to increase gas prices.
In the interview AGL says its request to increase its retail price for gas reflects market dynamics, as Australia’s east coast is exposed to international prices.
Simshauser said “There’s two things that are driving price increases at the moment. The first one is that wholesale gas prices are actually on the move, and they’re moving up in line with the contraction in supply/demand balance on the east coast of Australia. So right now you’ve got three very large LNG (liquefied natural gas) terminals being constructed up in Gladstone in Queensland. They are going to have a profound impact on the demand side of the equation in the gas market.”
Simshauser acknowledged the irony of the situation as consumers faced increased gas prices despite additional supply being available.
“So two things are happening at once. First of all, demand is outstripping supply, so that’s going to actually place pressure on wholesale prices to begin with. Secondly, the incremental supplies that are coming onto the market are an inherently higher cost resource than has historically been the case,” he said.
For the full transcript go to: http://www.abc.net.au/pm/content/2014/s3990822.htm