Australian manufacturers are facing an existential crisis as soaring energy prices, driven by east coast gas exports, threaten the industry’s survival, according to Weld Australia.
The call to action follows the release of new research from The Australia Institute, which reveals that wholesale gas prices have more than tripled and electricity prices have nearly doubled since 2015.
The Australia Institute’s report shows average wholesale gas prices have surged from $3.33 per gigajoule before large-scale exports to $9.67 per gigajoule — a staggering 190 per cent rise.
Electricity prices, which track closely with gas prices due to the National Electricity Market’s design, have jumped 73 per cent in the same period.
The introduction of unrestricted liquefied natural gas (LNG) exports from the east coast has exposed Australians to the volatility of global energy markets, amplifying the domestic impact of international shocks such as the Ukraine war.
Geoff Crittenden, CEO of Weld Australia, said manufacturers are bearing the brunt: “Gas exports have exposed Australian manufacturers to international price volatility and cost blowouts that are decimating their competitiveness.
“Our industry is already under intense pressure from subsidised imports. Rising energy costs are a double blow many can’t survive.”
Crittenden added: “It beggars belief that, for over a decade, governments have allowed LNG producers to export surplus uncontracted gas while Australian manufacturers struggle to secure affordable supply.
“The system is broken, and it needs to be fixed now.”
The Australia Institute’s findings point to deliberate price manipulation. Gas producers, including Santos, were upfront about their intentions; in 2014, Santos told investors its Gladstone export terminal was “as much about raising the domestic gas price as it was about exports”.
This dynamic has not only impacted gas bills but also electricity costs, as gas-fired power stations frequently set the wholesale market price.
For manufacturers, this has meant a double hit.
“Australia’s manufacturing sector, particularly advanced fabrication, relies on energy certainty and affordability,” said Crittenden.
“The current approach prioritises profits for foreign-owned gas giants over Australian jobs, industry resilience, and energy security.
“That must change.”
Weld Australia is urging federal and state governments to take immediate action, including:
- Implementing a national domestic gas reservation policy, prioritising affordable supply for local manufacturers.
- Introducing export restrictions or quotas on uncontracted gas during periods of domestic shortfall.
- Supporting investment in electrification and renewable energy uptake to reduce reliance on gas.
- Reforming the National Electricity Market’s pricing to curb the outsized influence of gas prices.
“We are standing on the edge of industrial decline,” Crittenden warned.
“With the right policy settings, Australia can become a manufacturing powerhouse again.
“But unless we act now, we risk losing an entire generation of capability.”
