We’ve been warned about a looming gas shortage. What does it mean for households?

Prime Minister Anthony Albanese has said the government would work alongside the market operator to increase gas supply to the east coast, a day after the Australian Energy Market Operator (AEMO) issued a warning about gas supply levels in the eastern states in the coming months.

The market operator said that

and demand trends in NSW, Victoria and South Australia indicate there is “the potential for gas supply shortfalls due to the depletion of southern storage inventories.”

AEMO noted that the threat of gas shortfalls, driven by a rise in demand for gas due to recent cold weather and outages at a gas plant in Victoria, will likely continue until 30 September.

What does this mean for households?

Wesley Morgan is a senior researcher at the Climate Council, a not-for-profit climate science organisation.

He said that there is currently no shortage of gas to households and the warning is more of “a signal from the market operator” about risk.

However, any shortages could lead to a short-term climb in the price of gas, which would be reflected in household energy bills.

Gas is often the ‘price setter’ in the National Electricity Market (the market and power system that operates in the eastern and south-eastern states of Australia) because all other forms of generation in a given time period are paid what gas generators cost to run.

While the federal government has instituted measures, including a price cap that should limit the increase in the price of gas, professor Samantha Hepburn, a mining and energy regulation researcher from Deakin University, says that any increasing costs could be a “major concern” for households and businesses.

Professor Sarah Hepburn believes the unpredictability of gas prices has led to Australians turning away from gas. Source: Getty / Pablo Jeffs Munizaga/Fototrekk

“If you think of Victoria, for example, a lot of houses have gas heating, it’s very expensive … If they don’t want to pay that bill, they can’t put the heating on. I mean, these are major, major consumer concerns,” she said.

How do gas exports play a role?

While gas shortages can increase during periods of high demand, Morgan says that this does not reflect the amount of gas in Australia. Prices are instead driven up by the amount of gas that is exported internationally.

Approximately 80 per cent of gas extracted in Australia is exported overseas and attracts a higher price on the international market.

“We are one of the world’s biggest gas producers … We need to see multinational gas corporations that are exporting Australian gas abroad take responsibility for meeting Australia’s energy needs first,” Morgan said.

Hepburn said that when domestic supplies run short, gas needs to be bought back from the international market at high prices.

To maintain gas supplies onshore, Hepburn believes Australia needs regulatory mechanisms that compel producers to reserve gas for domestic consumption and take public interest into account.

“Where you’ve got lack of regulation, you have spiralling costs, and that creates energy poverty,” she said.

Are homes moving away from gas?

Research from the Australia Institute has found that more than half of Australians (55 per cent) feel positively about switching their homes away from gas and moving to full electrification.

Hepburn believes the unpredictability of gas prices has led to Australians turning away from gas.

While there are upfront costs involved in making the transition,

found Australians could save over $1,800 per year on energy bills by moving to an all-electric household, with estimated savings greatest in places like the ACT and Victoria, where households use a lot of gas.

Hepburn also thinks we’re seeing a shift in consumer attitudes towards gas because of its contribution to climate change.

‘Fugitive’ emissions from gas extraction — losses, leaks and other unintended releases — can release methane into the atmosphere. Methane is a powerful greenhouse gas 80 times more potent at warming than carbon dioxide over a 20-year period, according to the United Nations Environment Programme.

“It can be far more catastrophic if those emissions occur — and they do occur. Not as frequently as if you’re burning coal but the idea that gas is clean is flawed,” Hepburn said.

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