The truth behind rising gas prices (and what to do about it)

The proof is out there before our eyes, on our bills – gas is now expensive. However, it is taking most Australians a while to get over the shock and face reality: what was true about gas a decade ago, will never be true again.

It’s about dollars and sense

In March 2017, ABC News did a sound article on the globalisation economics behind rising gas prices. The article states:

  • The so-called domestic gas shortages that have caused higher gas prices are due to large gas exports to Japan, Korea and China
  • WA and NT led the way with establishing an export market, and the east coast states have followed suit
  • There are 7, soon to be 10, export plants dedicated to liquefying gas for offshore shipping to locked in export contracts
  • Gas production output will need to double to meet expected 2020 exports, not considering any rise in domestic gas use
  • Coal seam gas fields (fracking) in Queensland are less productive and costlier than originally hoped, forcing operators to look to South Australia and Victoria to fulfill export needs, forcing up local gas prices in these states
  • The only way domestic gas prices will fall again is by having all LNG plants at full capacity, with a surplus of gas stocks. However, if export prices remain high enough, that is where the gas will go first, therefore keeping prices up
  • Even if governments reserve a percentage of gas for domestic use, it won’t guarantee low prices

Queensland has now exceeded WA as the most expensive state for gas, about three times more than Victoria, which is the lowest priced state. With prices continuing to rise in every state and export demand now reaching Victorian producers, this is a trend Victorians need to be preparing for now.

And many are…

Gas is becoming a space-heating dinosaur

Recent studies by University of Melbourne Energy Institute (MEI) show that domestic gas demand is declining as more Australian householders make the economic decision to disconnect from the gas grid.

The savings from switching from gas can be hundreds, if not thousands of dollars per year. Alternatives include induction cooktops, hot water heat pumps and reverse-cycle air conditioners.

Reverse-cycle air conditioners now considered renewable energy – wait, what!

We all know by now, that heating and cooling amount to 40% of energy costs each year for the average Aussie home. With figures like that it pays to start here when assessing changes to gas usage.

Analysis done by the Alternative Technology Association (ATA) shows a large Melbourne home can save up to $658 per year using modern technology reverse-cycle over gas ducted. With operating efficiencies of up to 600%, reverse-cycle units like the Daikin US7 and Cora models use a small amount of purchased electricity to capture free renewable heat from the outside air. Compare this to ducted gas heating efficiencies of less than 50%. Also, newer reverse-cycle units take 1/13th of the energy needed to operate ducted gas and officially stops the outdated ‘gas costs less’ argument for good.

Goodbye gas, hello savings

Gas space heating follows the same trend. The Daikin Cora split system will save 27% or $60 per 500 hours of operation over a 5-star gas space heater. With most Melbournians needing heating from April to December every year, it doesn’t take long to rack up the savings. If you are committed to gas ducted for now, then the good news is that further electricity savings up to 25% are available from new replacement Daikin ducted systems.

As more Australians wise up to the greater economics of gas being directed to export and domestic commercial use, residential gas infrastructure and reliance will become a habit of the past. Future generations will look at gas stoves and gas heating the same way we think about wood and oil – how did they ever cope with that!

Consider beating rising gas prices by replacing your older reverse-cycle and gas heating units with new Daikin systems, and start saving today.

 

Sources:

https://theconversation.com/the-cheapest-way-to-heat-your-home-with-renewable-energy-just-flick-a-switch-47087

www.abc.net.au/news/2017-03-09

www.energyrating.gov.au