Households and manufacturing businesses in Australia have been suffering for years due to rising electricity and gas prices. Even worse, experts predict that prices will only continue to grow. The underlying causes behind these increases differ between the two utilities. Taking a look at the average gas and electricity bills for Australian households can help to shed light on this issue.
How much have gas and electricity prices been rising?
Electricity prices declined by eight per cent in the 2020-21 financial year. The Australian Competition & Consumer Commission (ACCC) attributed this partly to an increase in renewables and lower fuel costs. However, 2022 has seen higher prices, with households hit with double-digit inflation on their electricity bills.
Over the previous decade, electricity saw a 100.9 per cent price increase between 2009 and 2019. Australian households also saw their electricity bills surge on average by 72 per cent between 2003 and 2013. The gain is in real terms and takes into account the general increase in prices across all goods and services. This is particularly surprising considering that Australia has some of the biggest coal and natural gas reserves in the world. Australia’s annual production of both far exceeds its consumption.
Similarly, from 2003 to 2013, gas prices for households increased by 54 per cent. Gas and other household fuels experienced a further rise of 75.6 per cent from 2009 to 2019. In 2022, gas prices reached record levels, with gas companies making windfall profits while consumers faced rising household bills. Since 2015, the export rates of liquefied natural gas (LNG) from Australia have grown enormously. In fact, in 2019, Australia overtook Qatar to become the world’s biggest LNG exporter.
This makes a mockery of Australia’s climate change commitments. In 2022, Labor introduced a target of reducing emissions by 43 per cent by 2030 from 2005 levels. However, while the country continues to exploit its fossil fuel reserves, it is highly unlikely it will meet these ambitions.
What is the average gas bill in Australia today?
The average gas bill in Australia varies between different states. Each state enacts its own policies, which may make gas cheaper or more expensive for the consumer. Whether a state is a gas-producing state can also have a significant effect on prices. For instance, the eastern states began selling LNG abroad in 2015. They export nearly 75 per cent of their gas. This has resulted in a sharp increase in east coast wholesale gas prices.
Western Australia is also a gas exporter. It is the country’s largest exporter of LNG. However, the Western Australian government makes the gas industry keep 15 per cent of its LNG for the domestic market. Consequently, gas prices are far lower in Western Australia than in the eastern states. The average gas bill across Australia’s gas-producing states could be reduced through similar policies.
Average gas bill per household
For example, in September 2022, the average quarterly gas bill in Western Australia was AUD $138, according to Finder Consumer Sentiment Tracker. This was the cheapest rate in Australia. In comparison, average quarterly gas bills were AUD $226 in Victoria, AUD $205 in South Australia, AUD $197 in New South Wales and AUD $165 in Queensland per quarter.
Average electricity bill per household
According to the same survey, the average electricity bill per quarter was AUD $380 in South Australia, AUD $356 in New South Wales, AUD $318 in Victoria, AUD $312 in Queensland and AUD $259 in Western Australia.
Is natural gas bad for the environment?
When people think about the causes of global warming, carbon dioxide (CO2) is rightly regarded as the main culprit. For this reason, many people support natural gas as a ‘cleaner alternative’ to coal and oil. They reference statistics like that natural gas produces between 50 and 60 per cent lower CO2 emissions than other fossil fuels.
But, other greenhouse gases, such as methane, are also key drivers of climate change. In fact, methane is more potent than CO2 in the short term. Over 20 years, it traps 86 times as much heat in the Earth’s atmosphere. It is also the primary component of natural gas. Using it as an energy source is causing huge quantities to leak into the air. Humans have increased the atmospheric concentration of methane by over 150 per cent since the Industrial Revolution.
Methane leaks
Processing, extracting and storing natural gas for people to burn all result in methane leaks. It is largely for this reason that 15 per cent of all greenhouse gas emissions worldwide are methane. The more natural gas we use, the higher our methane emissions become. Leaks may occur from mining the gas directly from the ground. Alternatively, methane can leak from natural gas cookers in people’s homes. But, it gets worse.
Methane emissions are likely to be far higher than estimates have previously thought. The global fossil fuel industry has been underestimating its emissions of this potent greenhouse gas by as much as 40 per cent. For example, the Australian gas industry uses obsolete methods to measure its emissions. As such, they could be about 10 per cent higher. Similarly, methane leaks in the US are likely to be 60 per cent above the figures the US Environmental Protection Agency calculates.
Is natural gas bad for people?
Natural gas is bad for everyone since this fossil fuel contributes so much methane to global warming. However, it also poses a direct health problem to those who use it in their homes. Burning natural gas on a cooktop releases CO2, water and other gases. These include carbon monoxide, nitrogen oxides and sulphur dioxide.
It also produces twice as many microscopic particles of soot as cooking with an electric stove. This air pollution can accumulate in people’s homes and have severe side effects. It is particularly dangerous when used in areas with poor ventilation.
For example, nitrogen dioxide and soot can end up deep in your lungs. These particles can carry toxins that may be absorbed into the bloodstream. The greatest risk is for children, both atopic and nonatopic individuals. Studies show that respiratory symptoms are more common among minors in homes with a gas stove. Other findings reveal that natural gas could be behind 12 per cent of childhood asthma cases in Australia. The greatest threat is from gas cooktops.
Will Australians continue to use natural gas?
The majority of Australian states only have unconventional sources of natural gas remaining. Non-traditional sources of gas require controversial extraction techniques and mean the gas product is more expensive.
Ever since Australia’s eastern states found LNG markets abroad, the price of gas has skyrocketed at home. In the second quarter of 2022, costs reached AUD $28.40 per gigajoule in eastern states. The days of domestic gas prices of AUD $4 per gigajoule are long gone. The government should speed up the clean energy transition to get households off this expensive and polluting fuel, says Richie Merzian, Climate & Energy Program Director at the Australia Institute.
How would a transition to renewables affect the average gas bill?
Already, it would be cheaper for the majority of Australian households to use electricity instead of gas. The country’s use of gas-generated electricity decreased by 58 per cent from 2014 to 2020. Meanwhile, renewables now contribute 32.5 per cent of the energy for Australia’s largest electricity market. This change in supply is thanks to a swift and significant reduction in the price of renewable battery storage.
Moreover, renewable energy is currently cost-competitive with natural gas. The fossil fuel industry is keen for Australia to switch from coal to gas before transitioning to clean energy sources. But this does not make sense for anyone other than fossil fuel company shareholders. It would be cheaper to transition immediately to renewables.
As the clean energy transition progresses, the role of gas will decline to provide the electrical grid with a boost when solar and wind generation fails. This application for gas will be relatively small. It will be even smaller as the technology for big batteries and pumped hydropower improves. These renewable energy and storage technologies can provide the grid with additional power more cheaply than natural gas. Indeed, big batteries can meet peak demand for electricity at a 30 per cent lower cost than natural gas.
What does the average gas and electricity bill tell us about the future of Australia’s power generation?
Australians are being charged more for gas than overseas customers, according to the ACCC. Gas prices shot up in every state except Western Australia following the massive exportation of the fossil fuel. This shows the negative repercussions of unregulated exports and the mistake of relying on dirty energy sources. Electricity prices across the country are also on the rise.
To reduce the price of Australia’s average gas and electricity bill, a complete transition to renewable energy sources is needed. The biggest obstacle to renewable energy has been storing power for when the grid needs a boost. Now, batteries that store renewable energy have dropped sharply in price. Consequently, coal and gas generators are being closed down and replaced by wind and solar storage facilities.
What stands in the way of cheaper and cleaner energy for Australia?
These developments in renewable energy will benefit the consumer with cheaper energy. They will also prevent planet-warming greenhouse gases from entering the Earth’s atmosphere. Using less gas reduces the number of dangerous substances leaking into homes. It also avoids the enormous environmental damage caused by extracting and processing dirty fossil fuels.
However, even as Australia’s clean energy transition progresses, Labor is simultaneously planning new coal and gas projects. This shortsighted plan will only benefit the filthy-rich fossil fuel companies at the expense of our planet, our health and our bank balances.