Rising LNG prices could hurt Aust GDP

Australian manufacturers are calling on the government to intervene and cap natural gas prices, Bloomberg has reported. As more and more gas is exported to Asia, Australian buyers are paying more than twice as much as they did a decade ago, energy research company Wood Mackenzie says.

“We want to see a manufacturing resurgence in Australia like we’re seeing in the US,” Ben Eade, the recently named executive director of the industry group Manufacturing Australia, said in an interview.

“We have huge gas resources and if we target them properly there is no reason we can’t do that here.”

However, companies that are currently building liquefied natural gas (LNG) export projects off the east coast claim that government intervention would deter investment and hurt the economy.

Eade says that manufacturers need a ‘bridge’ to help adjust to a surge in prices before new supplies can be brought on.

“LNG exports will be great for the Australian economy; however, the impact of the short-term shift could be devastating for manufacturing in Australia,” Eade told Bloomberg. “We’re talking about a transition that according to our research could potentially wipe out $13 billion a year in GDP.”