Page 4 - AsianOil Week 50 2022

AsianOil COMMENTARY AsianOil

Australian gas cap will result

in less supply and more

demand: APPEA

The government's decisions will curb supply, increase demand and result in

higher energy bills for consumers

AUSTRALIA THE Australian Petroleum Production & Explo- The uncertainty that has resulted from the
ration Association (APPEA) has warned against reforms and measures to introduce a permanent,
WHAT: “reckless reforms” affecting the country’s gas regulated rate of return “severely undermines the
The Australian market which it says will result in higher prices case for investment in what is a high-risk, capi-
government has and reduced supply. tal-intensive industry,” she said.
introduced a cap on Australia’s parliament on December 15 McCulloch noted that some of the most cred-
wholesale gas prices and passed legislation setting a price cap on natu- ible and experienced global sources had warned
has introduced subsidies ral gas for one year and providing an A$1.5bn that this decision would hit Australia’s gas sector
for consumers. ($1bn) in relief for households and small busi- hard, reducing supply and increasing demand.
nesses suffering from soaring energy bills. This is the single worst piece of energy policy
WHY: “Two decades of policy reforms that enabled I have seen anywhere in the world in almost 20
The government is eager Australia’s standing as a global energy power- years of looking at global energy markets, despite
to shield consumers from house were unwound on Thursday, ignoring staunch competition from many other dread-
soaring energy costs. warnings this will lead to gas shortages and ful policies around the world,” MST Marquee
ultimately higher prices for Australian house- energy analyst Mark Samter commented.
WHAT NEXT: holds and businesses,” APPEA CEO Samantha “In my 30-plus years in management roles in
The gas industry warns McCulloch said in a commentary published by the gas industry I have never seen such destruc-
that the moves will result The Australian. “The impact of this far-reaching tive legislation,” Cooper Energy CEO David
in higher energy bills and and unprecedented intervention in Australia’s Maxwell added.
undermine investment in gas market is already evident. Previously agreed The gas industry also wants energy prices
supply. financing for new gas supply is being withdrawn to be lower, and supports “targeted relief” for
and contract negotiations have stalled.” households and business, McCulloch said. But

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