33,000 manufacturing jobs and a 27% decline in Australia’s chemical, rubber and plastics sector is at stake if Australia’s energy prices continue to climb, according to a new report released by the University of Sydney’s United States Studies Centre.
Entitled, “It Doesn’t Have to Be This Way: Australia’s Energy Crisis, America’s Energy Surplus,” the report reveals that Australia’s energy crisis goes beyond rising electricity bills and could have a devastating impact on the entire economy, impacting jobs and investment, and raising the prices of goods and services for households.
The report, which was backed by Dow Chemical and Chemical Australia, has found that Australian households and businesses pay dramatically more for their energy than their American counterparts — two to three times as much in many cases.
“An essential and irreplaceable input to many types of manufacturing, natural gas is now more than twice as expensive for Australian manufacturers as it is for their counterparts in the US state of Louisiana,” reads the report.
“And compared to 10 years ago, in nominal terms natural gas is now 177 per cent more expensive for a Melbourne-based manufacturer and 41 per cent cheaper for a New York-based manufacturer.”
The report, which notes that if Australia was a US state, it would be one of the most uncompetitive jurisdictions in terms of energy prices, also proposes several long-term fixes to drive down energy prices in Australia.
Ending moratoria on conventional and unconventional gas development, directly subsidising gas infrastructure expenditure (new pipelines, import terminals) and reforming the market architecture around gas pipelines and distribution networks, are some of the recommendations listed in the report.
The report also notes that getting the institutional and policy settings right will transform Australia’s resource abundance into economic abundance for the country, putting downward pressure on energy prices and emissions.
“In summary, the key lesson for Australia from the US energy revolution is that resource abundance will only get it so far,” it says in the report.
“Institutional arrangements, infrastructure development and regulatory and policy settings all matter for economic outcomes.”
“In the case of energy, getting these things right means avoiding billions of dollars in additional costs for households and businesses, more jobs and investment, higher wages and lower emissions.”
The full report is available here.