15-11-2014, 04:57 PM
Gas sector buoys economy
Angela Macdonald-Smith
523 words
13 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
The oil and gas sector's contribution to the economy will more than double to $67 billion by 2030, underlining the need to resist calls for policy measures such as gas reservation, according to new research.
The analysis by PwC for the peak industry body shows that for every dollar of production, the oil and gas sector adds 70¢ of value, higher than the 49¢ average of other sectors.
The release of the report on Thursday is included in the Australian Petroleum Production and Exploration Association's submission on the federal government's energy green paper, which highlighted the problems of potential shortages in the domestic gas market and rapidly rising prices.
The squeeze on domestic supply, exacerbated by the start-up of LNG exports from Queensland and slow development of coal seam gas in NSW, has led to calls from some manufacturers for a share of resources to be set aside for local use.
But APPEA chief executive David Byers said the PwC analysis was further evidence that gas reservation would just divert resources from one of the economy's most valuable sectors to less efficient ones. "It is crucial, therefore, that calls for policy interventions that seek to force non-commercial outcomes continue to be resisted," Mr Byers said.
PwC found the petroleum sector's direct annual contribution to economic output would grow from $32 billion in 2012-13 to $67 billion by 2029-30. By that time it would also be driving indirect value of a further $21 billion, representing a total contribution of 3.47 per cent to gross domestic product.
In terms of value added per unit of production, which measures a sector's efficiency in turning a unit of input into an output, oil and gas extraction sits third, behind only education and training, and financial and insurance services. Manufacturing sits last, adding less than 30¢ for every $1 of supply used.
"Manufacturing is generally associated with quite low value-added contributions, particularly in comparison to the gas industry," APPEA said.
In its submission on the green paper, the Energy Supply Association of Australia urged further reform in gas supply to increase competition and market efficiency. It highlighted surplus capacity in electricity generation and noted the green paper offered no solution.
It cautioned that oversupply is making financing in the sector difficult "which could affect reliability in the future". The association said the government "must carefully consider the rationale for encouraging additional supply of any type" and needed to focus on stable policy for an efficient market.
The ESAA also endorsed the emphasis in the green paper on the need for reforms in electricity tariffs to reflect real costs. But it said some consumers would face higher bills if they didn't shift demand away from peak periods, pointing to the need for information for households on how best to benefit from technologies such as smart meters.
Earlier this week the Business Council of Australia spoke out against gas reservation, saying it would deter the investment necessary to meet demand and would not address the problem of rising prices.
Fairfax Media Management Pty Limited
Document AFNR000020141112eabd0002y
Angela Macdonald-Smith
523 words
13 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
The oil and gas sector's contribution to the economy will more than double to $67 billion by 2030, underlining the need to resist calls for policy measures such as gas reservation, according to new research.
The analysis by PwC for the peak industry body shows that for every dollar of production, the oil and gas sector adds 70¢ of value, higher than the 49¢ average of other sectors.
The release of the report on Thursday is included in the Australian Petroleum Production and Exploration Association's submission on the federal government's energy green paper, which highlighted the problems of potential shortages in the domestic gas market and rapidly rising prices.
The squeeze on domestic supply, exacerbated by the start-up of LNG exports from Queensland and slow development of coal seam gas in NSW, has led to calls from some manufacturers for a share of resources to be set aside for local use.
But APPEA chief executive David Byers said the PwC analysis was further evidence that gas reservation would just divert resources from one of the economy's most valuable sectors to less efficient ones. "It is crucial, therefore, that calls for policy interventions that seek to force non-commercial outcomes continue to be resisted," Mr Byers said.
PwC found the petroleum sector's direct annual contribution to economic output would grow from $32 billion in 2012-13 to $67 billion by 2029-30. By that time it would also be driving indirect value of a further $21 billion, representing a total contribution of 3.47 per cent to gross domestic product.
In terms of value added per unit of production, which measures a sector's efficiency in turning a unit of input into an output, oil and gas extraction sits third, behind only education and training, and financial and insurance services. Manufacturing sits last, adding less than 30¢ for every $1 of supply used.
"Manufacturing is generally associated with quite low value-added contributions, particularly in comparison to the gas industry," APPEA said.
In its submission on the green paper, the Energy Supply Association of Australia urged further reform in gas supply to increase competition and market efficiency. It highlighted surplus capacity in electricity generation and noted the green paper offered no solution.
It cautioned that oversupply is making financing in the sector difficult "which could affect reliability in the future". The association said the government "must carefully consider the rationale for encouraging additional supply of any type" and needed to focus on stable policy for an efficient market.
The ESAA also endorsed the emphasis in the green paper on the need for reforms in electricity tariffs to reflect real costs. But it said some consumers would face higher bills if they didn't shift demand away from peak periods, pointing to the need for information for households on how best to benefit from technologies such as smart meters.
Earlier this week the Business Council of Australia spoke out against gas reservation, saying it would deter the investment necessary to meet demand and would not address the problem of rising prices.
Fairfax Media Management Pty Limited
Document AFNR000020141112eabd0002y