01 Dec 2022

Transcript: APPEA Chief Executive Samantha McCulloch interview about gas price caps with Sky News Political Editor Andrew Clennell

1 December 2022

Interview with Sky News Political Editor Andrew Clennell on PM Agenda

Parliament House, Canberra

Topics: Gas price caps, EnergyQuest report, Government intervention in gas market

Andrew Clennell: I’m joined by the Chief Executive of the gas industry representititve APPEA, Samantha McCulloch. Do you think it’s inevitable there will be a cap on gas prices and some sort of reservation introduced by the Federal Government?

Samantha McCulloch: Thanks for having me, Andrew. Look, I don’t think it’s inevitable and actually today we’ve released analysis that just highlights the consequences of a gas price cap. It underscores that introducing a price cap on gas actually does the opposite of what’s needed – it will actually reduce future supply, threaten future energy security and lead to higher prices in the long term – which actually hurts Australian manufacturers and hurts Australian households.

Clennell: How does it lead to higher prices in the long-term? Looking at it superficially, it looks like it is being supplied to the domestic market at a lower rate than currently the case. Surely that brings gas bills down and has some sort of effect on electricity bills.

McCulloch: What gas price caps would do in the wholesale market is actually drive up demand but reduce the incentive for supply. It reduces the incentive for exploration and to develop those new supplies. And that’s the key to bringing down prices in the long term and to reducing the volatility that we are currently seeing in the market.

Clennell: What would you like to see the government do?

McCulloch: We would like to see the government let the existing mechanisms that are in place work. For example, we struck a Heads of Agreement with the government in September. There is evidence that is now working. That is an agreement that ensures uncontracted gas is offered to the domestic market first. Just this week we saw Santos strike an 11-year supply deal with Brickworks. So let’s let those mechanisms work.

The second thing I would say is that we need early and engaged consultation with the government on proposed measures. I think the unintended consequences of some of the measures that are being proposed really underscore the importance of having that early consultation before a decision is made.

Clennell: Samantha McCulloch, thanks so much for your time.

McCulloch: Thanks, Andrew.