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Gas export boom threatens electricity prices -

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ELEANOR HALL: The Australian Industry Group is warning today that exporting large quantities of natural gas to Asia could endanger Australia's energy security.

It has released a report that has found that on the east coast, gas prices could triple in the next ten years, well outstripping any costs related to the carbon tax.

The Industry Group says that unless some gas reserves are kept for national use, Australian manufacturers will be forced to rely on fossil fuels.

Sarah Dingle has our report.

SARAH DINGLE: The east coast natural gas industry is powering up.

Queensland in particular is preparing for an export boom, with the state seeking to capitalise on coal seam gas and a liquefied natural gas industry.

But the rush to export will damage the domestic market for natural gas, according to the Australian Industry Group's Innes Willox.

INNES WILLOX: Australian industry faces a tripling of gas prices if we continue with this policy without stopping to pause and have a look at what we're doing and make sure that we're not just wasting our natural resources without providing some benefit to broader Australian industry.

SARAH DINGLE: The Australian Industry Group and the Plastics and Chemicals Industries Association have released a report warning of the unintended consequences of an east coast gas export boom.

They say without ensuring local supply, domestic industry and Australian households will suffer.

INNES WILLOX: We expect that by 2023, gas exports from the east coast will possibly be around about 24 million tonnes, which is a rise from nothing to a large amount in a very short time.

That will get sent overseas and then a lot of that will return to Australian households for domestic use, as well as for Australian industry.

You're going to have a rise of maybe up to about five to eight times in the amount of cost for Australian households in their gas use if this policy is pursued, because the international gas price will be the new market price in Australia.

And that will have a significant impact on our gas bills.

The impact of mass export of gas without taking into account domestic supply will have a far greater impact on costs for Australian industry than the carbon tax, for instance.

VLADO VIVODA: Certainly not good news for a move to a less carbon intensive future, because without any Government policy to, in fact, conserve or reserve a percentage of gas production in Australia for domestic usage, it will be very hard to envisage a move from coal to gas powered electricity plants in the future.

SARAH DINGLE: Vlado Vivoda is a gas analyst from Griffith University.

He says for decades, the West Australian Government has had a set reserve to keep 15 per cent of gas from the North West Shelf for domestic use.

But in Queensland, he says the former Bligh Government only paid lip service to the notion of domestic gas reserves.

VLADO VIVODA: The Queensland Government introduced a policy to set aside future gas fields for future domestic supply if needed.

To date, no gas field has been set aside by the Government despite a worsening domestic gas shortage and increasing prices.

They do set aside a field. I've read somewhere that it would take up to seven years before gas could start flowing to the domestic market.

SARAH DINGLE: Vlado Vivoda says Western Australia's 15 per cent domestic reserve should be applied nationally and without it, Australia is left largely vulnerable to the movement of international gas prices.

VLADO VIVODA: Australia is in fact the only country in the world that doesn't have a central government-imposed domestic reservation policy.

Even the United States and Canada have it.

SARAH DINGLE: The Australian Industry Group says a national gas reserve for domestic use is a hard option, but one they think should be on the table.

The Energy Resources Minister and the Climate Change Minister were unavailable for comment.

ELEANOR HALL: Sarah Dingle reporting.