What you need to know about the Australian government’s proposed $100bn gas price hike
Australia is set to increase its gas prices by more than $10 a litre over the next five years, after the government’s planned carbon tax was announced.
It’s the latest in a series of government price hikes that have come as Australia struggles to cut emissions and tackle climate change.
The government’s carbon price increase, which will kick in from April 1, will see gas prices rise by an average of 2.6 cents per litre, a 2.2% rise from a year ago.
Australia’s gas producers are also planning to ramp up gas production to meet the extra demand.
Gas supply and demand: What are the biggest factors driving gas prices in Australia?
The rise in gas prices has been driven by higher prices for the fuel and by a number of factors.
A drop in gas demand has led to higher prices in recent years, but it is also due to the high cost of drilling.
In the past few years, demand for gas has fallen and gas producers have been forced to cut production.
But the Australian Energy Market Operator (AEMO) predicts that prices will rise as demand for electricity is lifted, as well as as by the higher cost of natural gas.
“AEME anticipates a peak in gas price activity in 2019-20 and a fall in demand by 2021-22,” the AEMO said in its latest energy forecast.
This will drive down the price of gas, which has fallen from about $4.00 per thousand cubic metres (mcm) in 2014-15 to about $2.00 this year.
As the cost of gas increases, it will be harder for producers to compete, particularly with cheaper imports, according to the AECO.
Lower natural gas prices are likely to lead to higher gas prices for households, particularly in rural areas.
There is also a possibility that the price rise could slow the growth of gas production.
The carbon tax, which aims to cut greenhouse gas emissions by 40% by 2030, is the most significant price increase since the introduction of the national emissions trading scheme in 2000.
Under the scheme, companies that emit more than 100,000 tonnes of carbon dioxide (CO2) will be penalised on a per tonne basis.
However, some analysts say the new carbon price could be too high and push up gas prices.
For the most part, gas producers don’t have to pay a price for gas, so they have the ability to price gas cheaper than other alternatives.
Instead, they have been able to raise prices to cover the costs of building new facilities and investing in capital.
At the moment, the Australian Bureau of Statistics says gas prices have increased by 3.6% over the past 12 months.
More to come.