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Running on empty – report predicts gas shortages by 2025


Release Date: 3/12/2019
Thousands of NSW small businesses and households will face gas shortages or significant cost increases if action is not taken on gas supplies, according to a new report by the state’s peak business organisation, the NSW Business Chamber.
 
The report, Running on Empty, prepared by EnergyQuest, further explores the latest forecast by the Australian Energy Market Operator (AEMO) indicating that NSW will face serious gas supply shortfalls by 2025.
 
“NSW gas users have already seen prices triple over recent years. Poor planning and a lack of action to develop significant gas resources in this state have resulted in NSW suffering the most expensive gas in mainland Australia and the least certainty with respect to gas supply security,” Hunter Business Chamber CEO Bob Hawes said.
 
“This report provides sobering reading and urgent action must be taken to protect NSW businesses, otherwise businesses will be forced to move closer to where the gas is.”
 
The report forecasts cost increases for NSW businesses of $26,400 per year for a typical commercial bakery, $66,000 per year for a galvanising plant or $369,600 per year for a tomato processor, compared with equivalent businesses located in Queensland.
 
Restaurateur Neil Slater, who owns Scratchley’s and Battlesticks on Newcastle Harbour, has seen his monthly gas bill rise by more than $1600 since March, an increase of more than 50 per cent. “Restaurants run on tight margins at the best of times, so an increase like that is incredibly difficult for a small business to absorb,” Mr Slater said. “And that’s just one of our energy costs – we also have substantial electricity bills – so when you add it all up, it has a big impact on the cost of doing business.”
 
The NSW Business Chamber estimates that at least 300,000 jobs in NSW depend on adequate and affordable gas supply, including up to 250,000 in manufacturing industries.
 
“Proven reserves currently available in NSW would meet demand for just 35 days, yet gas resources known to be in the ground across the state could supply the same level of demand for 174 years,” Mr Hawes said.
 
The report calls on the NSW Government to:
(1) rapidly approve the Narrabri Gas Project, subject to Planning Commission endorsement;
 
(2) support proposed LNG import terminals at Newcastle and Port Kembla; and,
 
(3) begin a program of upgrades to ageing gas pipeline infrastructure across the state.
“These initiatives are urgent as it will take around four years to get production to levels required to meet demand,” Mr Hawes said.
 
“NSW is projected to face serious gas shortages in less than six years. If additional gas supply is not sourced, NSW will face crippling price rises, forced business closures and job losses right across the state, including in the Hunter region.
 
“The Chamber is conscious of the critical importance of energy supply, cost and reliability for business in the region. If implemented, these recommendations will help avert a potential energy crisis in 2025.”



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