Critically high gas prices could force more businesses to relocate if prices don’t become more manageable, according to the Australian Competition and Consumer Commission.
High gas prices remain a critical issue for domestic gas users and could see more businesses move or close in the east coast, according to the Gas Inquiry 2017–20 Interim Report released by the ACCC.
The report shows that most commercial and industrial Australian gas users will pay more than $9/GJ (gigajoule) for gas this year, and some more than $11/GJ.
“Commercial and industrial gas users have been telling us for some time that at those gas prices, their operations are not sustainable in the medium to longer term,” said ACCC chair Robert Sim.
“Businesses that rely heavily on gas are increasingly likely to relocate from the east coast or wind up their operations.”
Early warning signs
Mr Sims pointed to this week’s announcement by Dow Chemical that it would close its Melbourne manufacturing plant due, in part, to high gas prices.
It came after RemaPak, a Sydney-based producer of polystyrene coffee cups, and Claypave, a Queensland-based brick and paving manufacturer, entered administration citing rising gas costs as an important contributing factor.
“We expect that those same suppliers have revised their prices down this year to reflect these latest expectations as quickly as they escalated them last year,” Mr Sims said.
“So far, we are not seeing this.”