The cap on east coast gas prices has been set at just a fraction of the European Union’s price cap, and amounts to a ‘severe over-reaction’, EnergyQuest said.
The $12 a gigajoule price cap imposed by the Albanese government on east coast gas is about 85 per cent below the price cap imposed in the European Union, consultancy EnergyQuest says in an analysis that appears to question the structure and logic of the policy that has paralysed the market.only if the benchmark price for wholesale gas in the region exceeds €180 a megawatt-hour, equating to $76/GJ for gas, the consultancy said, noting that European prices are well below the trigger level.
“Clearly the federal government and the ACCC [Australian Competition and Consumer Commission] must believe that Australian industry is unable to compete against these high European energy prices,” EnergyQuest said in its monthly LNG market analysis released on Wednesday. They say the price cap in Europe is high enough for the market still to work, pointing to the recent slide in European prices to pre-Ukraine war levels, based on fundamental factors such as new supply, adequate storage, mild winter temperatures and reduced demand.
“This will simply put more question marks on a rushed and confused intervention and bog down the gas market even further if that is possible,” the executive said.
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