CANBERRA: Households face a 30 per cent jump in their gas bills in the next five years as Australian gas producers increasingly ship the fuel overseas to meet rising Asian demand.
The average annual household gas bill in Melbourne, where gas use is higher than any other major state capital, is likely to reach $1600 by the end of the decade, up from $1200 in 2014, ANZ said in a report released on Thursday.
While households in Sydney and Brisbane could see higher percentage increases, their total bills are likely to be lower, the bank found.
It is forecasting the average household bill in Sydney will rise by 33 per cent to more than $1200 by 2020, while Brisbane households would see a 29 per cent hike to more than $800.
The rapid construction of new plants in Australia that turn gas into liquefied natural gas (LNG) for export is set to treble demand for gas from business and other users on the east coast in little more than two years, forcing local prices higher.
The result is that households and industrial users face much higher prices for gas in the next few years, while users overseas are enjoying lower prices, senior commodity strategist Daniel Hynes said.
ANZ is forecasting wholesale prices for gas in eastern Australia will increase from the historical norm of $3 to $4 a gigajoule to more than $7 to $8 per gigajoule, and possibly higher in Queensland.
However, households will be spared the sorts of price hikes that industrial customers will suffer as wholesale prices account for just over 10 per cent of household gas bills, said Felicity Emmett, co-head of economic research at ANZ.
“That doubling in wholesale prices will probably translate to we estimate around a 30 per cent increase in household bills for gas over that five-year period,” she said.
“Some states will be more affected – Melbourne is going to be most affected – and also higher users of gas,” she said.
Still, the overall economic impact of Australia’s fast-growing LNG exports will be significantly positive, ANZ found, calculating that the value of gas exports could triple within five years to more than $50 billion a year.
ANZ expects LNG will overtake iron ore as the key driver in Australia’s exports by the end of 2016, resulting in higher tax revenues and state royalties, while shareholders will benefit through higher dividend payments from LNG producers.
