Energy crisis threatening manufacturing, jobs: report

A report released recently by the University of Sydney’s United States Studies Centre, entitled ‘It Doesn’t Have to Be This Way: Australia’s Energy Crisis, America’s Energy Surplus’, reveals that Australia’s energy crisis goes beyond rising electricity bills and could have a devastating impact on the entire economy, impacting jobs and investment, and raising the prices of goods and services for households.

The report’s economic modelling shows what would be at stake for Australia if energy prices continue to climb: a further increase in domestic gas prices by 25% would result in a reduction to Australia’s GDP by 1.15%.

While lack of clear, stable legislation has caused Australia’s energy crisis, the report demonstrates how the right policy parameters and accessing the country’s rich natural resources can reduce energy prices and carbon emissions while maintaining reliability, as the United States has done. Since 2008, industrial gas prices have increased by 43% in Australia, while in the US prices have decreased by 63%.

“The energy crisis in Australia has driven increasing operating costs that are simply unsustainable for businesses,” said Dow President Australia & New Zealand Louis Vega. “We are at an inflection point, where a continued lack of action will ultimately lead to a further and final decline in the output of Australia’s manufacturing industries and across businesses of all types, and result in significant economic losses to Australia and its businesses.

“Australia has an abundance of energy resources, yet consumers and businesses are paying dramatically more for energy than their American counterparts,” he continued. “This report shows how the US addressed the uses of its natural resources to reinvigorate its economy; giving us areas to focus on as we all work to address the energy crisis here in Australia.

“We need a national energy plan that encourages investment in Australia and that will aid the transition to a low carbon future.

“The USSC report reinforces our continued call for legislative action to support a supply-side solution that can establish a gas market in this country, and build a stable and reliable energy market,” Vega said.

Key highlights from the report:

• Compared to 2008, natural gas is now 177% more expensive for a manufacturer in Melbourne and 41% cheaper for a New York-based manufacturer.
• US carbon emissions from electricity generation have declined by more than twice the rate of Australia in the last 
decade.

• A 25% increase in current gas and electricity prices would result in a 27% decline in Australia’s 
chemical, rubber and plastics sector and a loss of around 33,000 manufacturing jobs.
   

The USSC report highlights the need for governments, state and federal, to work together on a national energy strategy embracing all energy sources to develop an Australian gas market and increase domestic supply.

The report can be downloaded at http://apo.org.au/node/210241.

Image source: Getty.