Gas shortage could threaten household energy supply, AEMO warns

The Australia Energy Market Operator (AEMO) is warning gas supplies to the east coast could fall short of what’s needed in the coming winter months. What will this mean for your household energy bills?

The market operator says gas demand trends in NSW, Victoria and South Australia indicate there is “the potential for gas supply shortfalls due to the depletion of southern storage inventories”.

AEMO says gas shortages are likely to continue until the end of September and are being driven by a sharp rise in demand due to the recent spate of cold weather we’ve been having, particularly in southeast Australia. A gas plant outage in Victoria has also contributed to the situation.

Not just used for heating and cooking, natural gas is also used as a backup electricity generation method, further increasing demand.

Samantha McCulloch, CEO of advocacy group Australian Energy Producers told Michael West Media gas generators were working hard to meet the increased winter demand.

“Gas producers are doing everything they can to meet the heightened demand and to keep Australian households warm and businesses running,” she said.

“Peak winter gas shortages and a fragile electricity network should come as no surprise following repeated warnings from AEMO, the Australian Competition and Consumer Commission and other independent experts.”

Still, it’s not a situation Australia should be in. We are the world’s fifth-largest exporter of natural gas, sending more than 100 billion cubic metres – or about 82 per cent – overseas each year and have more than enough domestic supply to cover our energy needs.

Can government intervene?

Prime Minister Anthony Albanese says his government will work with AEMO to ensure supplies are stable. Speaking to the ABC last week, Mr Albanese says problems with gas supplies are nothing new.

“We’ll work those issues through with AEMO, it’s AEMO’s job to undertake these measures and provide this information … this is not the first time that (the gas shortfall warning) has been declared,” he said.

“We need more gas in the east coast market, that has been known for some time.”

But he did not give any concrete plans for how the government will actually increase gas supply.

What will it mean for households?

It’s important to note this is a warning about potential future gas shortages and that there is currently enough gas to supply households.

A spokesperson for energy minister Chris Bowen told the AFR that AEMO’s warning showed the system was working exactly as it should.

“Today’s notice is about a potential risk, not a risk that has eventuated,” she says.

“AEMO and the market are taking steps to ensure the risk is mitigated ahead of time.”

Wesley Morgan, senior researcher at the not-for-profit research group the Climate Council, told SBS News the current warning is more of a “signal from the market operator” about supply risk.

But he said any actual gas supply shortfalls would lead to a rise in gas prices – which would then have a flow-on effect to all energy bills.

This is because gas often acts as a ‘price setter’ in the National Electricity Market (which covers wholesale prices in southeast Australia) and is also used for electricity generation in the absence of renewables or coal power.

Mr Morgan said the true reason domestic gas supplies are threatened is the previously mentioned export market, where Australian gas fetches a higher price.

He said domestic gas suppliers should be forced by the government to reserve a portion of gas for domestic use, for precisely moments like this.

“We are one of the world’s biggest gas producers … We need to see multinational gas corporations that are exporting Australian gas abroad take responsibility for meeting Australia’s energy needs first,” he said.

Are you worried about a gas shortage? What do you think should be done to secure Australia’s gas supply? Let us know in the comments section below.

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