Households across Australia are grappling with a dramatic surge in gas bills, with costs skyrocketing by 130% over the past 15 years. However, the pain is not being felt equally, with a stark divide emerging between the nation's east and west.
The Great Gas Divide: Which Cities Are Suffering Most?
Analysis of consumer price data reveals a deeply uneven landscape. Residents of Melbourne, Sydney, Adelaide, and Canberra have been subjected to the most rapid increases. For Melburnians, the situation is particularly acute, with gas bills almost doubling in a decade and rising by 60% in the last five years alone.
In stark contrast, consumers in Perth, Darwin, and Brisbane have largely been shielded from these outsized price hikes. This geographical split underscores the complex and fragmented nature of Australia's domestic energy market.
Why Are Prices Climbing So Steeply?
Experts point to a confluence of three critical factors driving the cost crisis. Josh Runciman, lead gas analyst at the Institute for Energy Economics and Financial Analysis (Ieefa), outlines the primary causes.
Firstly, the era of cheap, easily accessible gas is over. Alison Reeve of the Grattan Institute notes that the nation has exhausted its low-cost reserves, such as those from the Bass Strait. New sources are often more expensive to develop and farther from where the gas is needed.
The second, and most politically charged, factor is the rise of the east coast liquefied natural gas (LNG) export industry. Since the first shipment from Queensland in late 2014, domestic prices have become linked to the volatile international market. Wholesale prices tripled to around $10 per gigajoule soon after exports began and have remained elevated.
Finally, a lack of competition exacerbates the problem. Three major LNG exporters control approximately 90% of economically recoverable gas reserves on the east coast, creating a market prone to scarcity pricing.
Broader Impacts and the Road Ahead
The ripple effects are substantial. Ieefa analysis suggests higher gas bills cost Australian households and businesses an extra $4.3 billion in the 2023-24 financial year. Manufacturers have been hit hard, with their gas input costs soaring by 120% since early 2010.
The Albanese government is preparing to release a plan aimed at delivering more affordable and secure gas, particularly for the east coast. However, experts warn that the fundamental economics have shifted.
Forecasts from advisory firm EnergyQuest predict a supply shortfall for domestic use in southern states from 2028, peaking in 2034, as local production declines. Consequently, both Runciman and Reeve argue that policy must focus on reducing demand, not just managing supply.
"We have a lot of gas users who would be economically better off if they used electricity," says Reeve, highlighting that many industrial processes could convert. Runciman adds a stark recommendation for households: "Get households off gas to save our manufacturing sector."
The consensus is clear: while government intervention may provide some relief, the era of cheap gas is firmly in the past, compelling a fundamental rethink of how Australia powers its homes and industry.
