Public Policy Papers

Public Policy Paper #5/2016: East coast gas pipelines - Is price control warranted?

Author: Dr George Raitt, Piper Alderman


Key Points:

  • After a year-long inquiry, the Australian Competition and Consumer Commission concluded that east coast gas markets are competitive, but that pipeline operators are exercising market power. 
  • During the period of the inquiry, east coast gas prices have been affected (and continue to be affected) by growth in demand for export LNG, volatility in oil prices (against which export LNG prices are pegged), and static domestic demand for gas, leading to shortages and higher prices for domestic users.
  • The ACCC conclusion is based on anecdotal evidence, and the inquiry did not conduct a forensic investigation into prices, costs and profits, leading some industry participants to contest the findings that pipeline charges (rather than other market forces) have adversely affected household gas prices. 
  • The ACCC considers that current competition law does not address the inefficiencies they perceive, since they have concluded that east coast gas markets are competitive.  The ACCC has proposed changes to the gas pipeline access regime because the ACCC considers that the regime does not adequately control what it considers to be excessive pipeline charges. 
  • In questioning the ACCC’s conclusions and recommendations, this paper advocates three points.

pdf Click here to download the full paper.

After a year-long inquiry, the Australian Competition and Consumer Commission concluded that east coast gas markets are competitive, but that pipeline operators are exercising market power.

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