The Australian government is poised to introduce a new domestic gas reservation policy on the east coast. The plan is meant to tackle growing concerns around spiking gas prices and domestic supply. Large gas producers in Queensland export the vast majority of their gas to overseas buyers and long-reliable wells in Bass Strait are running empty.
While details are still forthcoming, the broad brushstrokes are clear. Gas reservation policies work because, in this instance, they require east coast liquefied natural gas (LNG) producers to reserve specific volumes for domestic use rather than exporting them.
It’s not unexpected. The government flagged the need for major reform following a sector-wide review of the gas market. Domestic gas prices have tripled in a decade as producers focus on export markets. Price rises have hit big users hard and driven up power prices, as gas is now the most expensive way to produce electricity.
