Trading Room home page

Aussies pay too much for gas: Dow boss

Market watch top headlines

Australian reports

World reports

Stocks to watch

AVJ, BBG, KMD, MYR, NAB, PSQ,

MELBOURNE, Dec 2 AAP

December 02 2012, 12:43AM

There's no way Australian businesses should have to pay high gas prices for energy when the resource is produced locally, says the head of global giant Dow Chemical.

Andrew Liveris, the Queensland-born head of the US chemical manufacturer, was referring to the current tension between Australian manufacturers and gas producers who lock in high export prices from energy poor countries.

Mr Liveris says the development of cheap shale gas and oil in the US is a "gift from heaven".

It's helping create a renaissance in American manufacturing due to the competitive domestic gas sector now in place, greatly helping an energy intensive manufacturer such as Dow Chemical.

Australian industrial gas consumers, on the other hand, are paying more than twice as much as their US gas counterparts with producers focusing on higher-price exports to countries such as Japan.

"What we have to do as a country is not unlike what is going on with the telecommunications network and the broadband discussion," Mr Liveris told ABC TV'S Inside Business on Sunday.

"If you build the infrastructure and the private sector can do it and allow shared pipelines, if you build it you will get a domestic system and a pricing system that defies the oil gas parity pricing that countries like Australia should never have.

"If you have the resource in your country, you shouldn't be paying the highest alternative price of the country that doesn't have the resource.

"Why are we paying Japan energy prices when we have domestic gas price, domestic gases."

A few oil and gas companies were seeing the benefit of Australia's massive resource base instead of the whole country, Mr Liveris said.

For Dow Chemical, the US gas boom had allowed it to invest $US4 billion and create 5,000-6,000 new jobs while there was $80 billion in investment and one million new manufacturing jobs around the country.

Australia's federal government has resisted calls to reserve gas for domestic use, although the highest gas using state Western Australia does have a domestic gas reservation policy.

By Greg Roberts