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Rising gas prices push manufacturers to shift from gas to coal

February 7, 2014 • News

At least two manufacturers are considering switching from direct gas supplies to coal as an energy source to avoid paying steep prices for gas, according to a report from The Australian.

Free Digital Photos user John Kasawa

Free Digital Photos user John Kasawa

Following Stanwell’s announcement this week that it would mothball the gas power station at its Swanbank site and resurrect a coal unit, industry groups warned that more businesses could go down the same path.  Stanwell’s Swanbank E station will be mothballed for three years beginning October 1. The decision was brought about by a slowing market and rising gas prices, The Queensland Times reported.

The move to go back to coal will leave 33 Stanwell jobs redundant.

Manufacturing Australia’s Executive Director Ben Eade said the high price of gas has led to plant closures and the decision to invest in other countries.

“Members have closed plants because of the cost of gas. Others that had wanted to switch from coal to gas have now ruled it out because of the cost of gas. One other member, which doesn’t have the option of switching to coal . . . has chosen to invest in the USA,” Mr Eade said.

Domestic gas prices have now skyrocketed to an average of $8 to $9 from $3 per gigajoule. Some users are even asked to pay up to $10, according to Mr Eade. He said that domestic customers were “being asked to pay one of the world’s highest prices for gas”, as Australia is on the verge of being a major gas exporter.

Australian Industry Group Chief Executive Innes Willox backed Mr Eade’s comments, addressing the soaring gas prices as the “elephant in the room”.

“We need to seriously come to grips with their impacts and to start work immediately on ensuring the long-term viability of affected industries,” Mr Willox said.

“The risk is that if we don’t start developing alternative strategies, more businesses will have little option but to convert to coal . . . or move offshore.”

 

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