AUSTRALIA'S rush to ship gas overseas could decrease local demand as prices skyrocket, an inquiry has heard.
In a submission to the NSW lower house inquiry into downstream gas supply on Monday, the Department of Trade and Investment states that a "huge decline" in available supplies at current prices were expected to hit in the next two to three years.
With the push to export the gas overseas, it argues that local customers will now have to compete with overseas counterparts who are generally willing to pay more.
"If domestic demand for gas falls because gas becomes too expensive, the economic viability of gas pipelines and distribution networks in NSW may be adversely affected," it states.
Steve Davies from the Australian Pipeline Industry Association (APIA) told the inquiry that the current pipelines ferrying the resource into the state were more than adequate to meet current and future demands.
With the closure of large industrial facilities on the eastern seaboard, Mr Davies said the predictions were that demands for gas would actually decrease over the next few years.
APIA, which represents the owners and operators of the nation's gas pipelines, believes it would be unlikely there would be greater investment in transmission networks.
"At this stage it seems it's the gas price itself and the impact of the new export industry on gas price that will have a much bigger impact on gas demand on Eastern Australia than the carbon price," Mr Davies told the inquiry.
Energy Users Association Australia, which represents companies such as BHP Billiton and Woolworths, said the government needed to encourage the development of the Coal Seam Gas (CSG) industry, rather than just restricting it.
While the association's CEO Phillip Barresi said he was not calling for a 'domestic gas reservation', he said the state government "should ensure that CSG developments do not result in greater resource availability for LNG exports".
"Energy users are very concerned over their inability to obtain long-term gas supply contracts and they are concerned that the short-term contracts reflect a preference for procuring gas to meet LNG export requirements rather than selling to the domestic market," he said in a submission.
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