Key factors that influence east coast gas prices
EnergyQuest forecasts that overall demand and supply of gas for the domestic east coast market will fall in coming decades, but supply will generally fall faster than demand over the next decade which will place upwards pressure on gas prices. The cost of production is expected to rise as low-cost gas fields decline, LNG imports are also likely to be needed to meet demand and will be supplied at (higher) international prices – both these factors will place further upwards pressure on prices.
Additional factors that can impact prices include demand for gas for power generation, seasonal demand for gas heating in southern states, government regulation, and contract terms.
On any given day one or more of factors may dominate and a confluence of factors pushing in one direction can lead to significant price deviations. An example is the winter of 2022 when a combination of domestic factors – primarily a lack of coal and renewable electricity generation – led to east coast gas prices increasing by up to 400%. Since the peak in 2022, gas spot prices for the Victorian and Queensland gas supply hubs (for the December Quarter 2023) returned to past pricing levels at around $10.31/GJ.
Read the full EnergyQuest fact sheet at the link below.