Consumer watchdog investigates gas competition

THE Australian Competition and Consumer Commission is investigating whether poor competition is driving up wholesale gas prices in eastern Australia.

New South Wales, Queensland, Victoria and South Australia gas markets will come under the gaze of the inquiry in terms of production, processing, and transport and storage costs.

Federal Small Business Minister Bruce Billson said the government had fielded complaints that a lack of transparency was hindering efforts to buy gas.

"Our wholesale gas markets are based on confidential bilateral contracts with a comparatively small number of suppliers and infrastructure owners," Mr Billson said.

"Participants have complained about a lack of transparency in the gas market and the information asymmetry facing those trying to access gas."

The year-long inquiry will begin straight away, with ACCC chairman Rod Sims saying the watchdog will use compulsory information-gathering powers to collect data.

"Previous inquiries have been hampered significantly by a lack of information," he said.

"For example, conflicting accounts by industry players on whether gas is being made available, and at competitive prices.

"The ACCC has the tools available to gain the information that is essential to complete the task given to us."

Australian Petroleum Production and Exploration Association acting chief executive Paul Fennelly said he was confident the industry would be vindicated by the process.

"The industry will participate constructively and is keen to demonstrate there is adequate competition to allow the market to operate effectively," he said.

"Importantly, the inquiry also provides an opportunity to focus ... on removing the regulatory handbrake that is effectively blocking the industry's development in NSW and Victoria.

"This would not only allow the market to work more efficiently and effectively, it would also bring on more gas supply and put downward pressure on prices."

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