Discuss about the Reforms in Education, Meat, Agriculture and Tourism Industries in Australia.
The article “Malcolm Turnbull says he's got a guarantee on gas supply” written by Chris Pash on 15th March 2017 outlines the situation of gas supply and demand in Australia. The domestic market has been hit by shortage of gas following the directive of the energy regulator to a gas-peaking power plant to generate electricity during a heat wave. The high domestic demand for gas from families and businesses with a reduction in the supply of this resource has made the prices to go up. Malcolm Turnbull, the Prime Minister, held a crisis meeting with gas companies to find a solution.
The meeting generated some solutions meant to restore the anomalies in the supply of gas. For example, the gas companies agreed to provide more gas to the domestic marketplace as soon as possible to put the rising prices in check. The gas producers also decided to avail sufficient gas so as to handle any situation in the next summer that may result from the heat waves. Furthermore, the government has a significant role to play to guarantee the delivery of cheaper and reliable of gas supplies to the domestic families and businesses. The prime mister appealed the state governments to encourage onshore exploration of gas to guarantee future supplies (Pash, 2017). Enhancing market transparency was also noted as an important measure in facilitating competition between the gas companies as well as information for consumers.
Demand and Supply of Gas
Energy is a valuable resource in any state. In Australia, the demand for gas comes from both the families and business. Therefore, any disruption in the supply of gas will be felt hard in the entire country. For instance, the recent heat wave that disrupted the generation of electricity made the regulator in the country to direct the leading gas generator plant to produce electricity. This move led to a reduction in the supply of gas. With the demand for gas remaining relatively stable while the supply declining, the families and businesses have had to pay for higher prices of gas than before.
Before the interruption in the supply of gas, equilibrium was attained in the market as point A where the equilibrium quantity is Qe whereas the equilibrium price is Pe. When the gas-peaking power plant in the country diverted its production to electricity following the directive of the regulator, the supply of gas in the market reduced. This situation is shown on the graph one above by the shift of the supply curve from S1 to S2. The quantity of gas supplied decreases from Qe to Q1 while the prices increase, that is, change from Pe to P1.
Measures and Plans
The crisis energy meeting between the gas producers and the prime minister led to resolutions meant to increase the supply of gas in the domestic market as soon as possible. For instance, two of the Liquefied Natural Gas exporters agreed to start supplying gas to the local market to help reduce the prices. If these measures are implemented, then we anticipate the prices of gas in the domestic market to decline.
If the two companies involved in export of gas start producing for the local market, then the supply of gas will increase. The increase in the provision of gas is shown by the shift of the supply curve from S1 to S2. The quantity provided will increase from Q1 to Qe while the prices will decline, that is, movement from P1 to Pe.
med by families and the business community. The shortage of this product will not only increase the cost of living for Australians but also increase the costs of doing business (Abbott, 2016). In the recent years, Australia has been experiencing an increase in the GDP per capita. With the improvement in the living standard, individuals will also enhance their demand for gas. Therefore, it is vital for the energy regulator in the country to devise measures to ensure stability in the supply of gas to avoid a crisis.
The government should give emphasis to both the current and future needs concerning gas. There is a need for the leadership to devise measures to increase the supply of gas in the market. Already two companies that produce gas for export have agreed to provide the gas to the domestic market. There is no need of a country being a net exporter of gas, and yet there is a shortage in the local market. Therefore, the government should negotiate with more companies to supply part of their produce to the local market to check on the shortage.
Moreover, the government should also focus on establishing long-term certainty in the provision of gas. Additional investment in exploration, pipeline infrastructure, and production can help increase the supply of gas in the country (Grafton & Lambie, 2014). The development of infrastructure will motivate more companies to increase production and supply to meet the demand in the market. Some territories in Australia such as Victoria and Northern Territory have laws that restrict the exploration of gas (Haslam Mckenzie, 2013). This move is a significant impediment to lasting, sustainable and affordable gas. Therefore, these regions should consider the relaxing the policies to facilitate the supply of gas in the country.
Gas is an essential resource for Australians. This resource keeps both the families and businesses moving. It is clear that its shortage is likely to have an enormous impact on the economy of the country. Therefore the government should intervene to guarantee a steady supply of gas to prevent the prices from hiking. A short term approach should entail negotiating with the companies that produce gas for exportation to direct some their produce to the local market. Increasing investment in the production of gas will take care of the long-term needs. Ultimately, the states should relax the policies restricting the exploration of gas.
Abbott, M. (2016). The economics of the gas supply industry. London : Routledge, Taylor & Francis Group.
Grafton, R. Q., & Lambie, N. R. (2014). Australia's Liquefied Natural Gas Sector: Past Developments, Current Challenges and Ways Forward. Australian Economic Review , 509-522.
Haslam Mckenzie, F. (2013). Delivering Enduring Benefits from a Gas Development: governance and planning challenges in remote Western Australia. Australian Geographer , 341-358.
Pash, C. (2017, March 15th). Malcolm Turnbull says he's got a guarantee on gas supply. Retrieved April 27th, 2017, from Business Insider, Australia: https://www.businessinsider.com.au/malcolm-turnbull-says-hes-got-a-guarantee-on-gas-supply-2017-3