East coast gas producers say government intervention in the east coast gas market will not address the real problem in energy supply.
Caps on wholesale gas prices in Sydney look set to be extended by the energy market operator on Tuesday to head off further spikes in prices as gas producers such as Santos’ GLNG venture and Beach Energy warned that government intervention to restrict LNG imports or control domestic prices would not address the real problem.
He said that high “shadow” prices that signal what prices would be without the cap had sent the Sydney market over the threshold for a second trigger for the price cap, which would therefore remain in place. In contrast, the Brisbane price cap would likely be removed as the threshold for cumulative prices over a certain period was “at very limited risk” of being breached, with prices settling in the $36-$38/GJ range, he noted.The rocketing wholesale prices are the result of a spike in demand for gas for electricity generation to compensate for coal power outages and low renewables generation, just as demand for gas for heating has surged on the cold snap hitting the south-east.
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