Research released today by The Australia Institute shows that the Federal Government’s “gas-fired recovery” will not assist Australia’s manufacturing industry. Increasing gas production is likely to benefit gas exporters, not manufacturers. 

Australian manufacturing used just 373 petajoules (PJ) of gas, while more than 4,500PJ went to exports in 2018-19. Just 56PJ, or 1% of Australian gas is used as feedstock in manufacturing.

The gas industry also uses more gas just processing gas for export as Liquefied Natural Gas (LNG) than the entire manufacturing industry and twice as much as is used by Australian households.

Other key findings:

• 82% of Australian gas production goes to exports. Only 1% of gas produced in Australia is used for feedstock in Australian manufacturing.
• The LNG export industry used 12 times as much gas as the entire manufacturing industry.
• More gas is used just running gas export terminals than used by Australia’s entire manufacturing industry, more than twice the amount used by Australian households.
• The LNG export industry uses forty times the amount of gas as used by the chemical, polymer and rubber manufacturing industry.
• LNG exports employ only 4 workers for every petajoule of gas used, compared to around 760 workers per petajoule used in chemical and mineral processing manufacturing.
• Most manufacturing workers work in sectors that use little if any gas. Three quarters of gas used in Australian manufacturing is used by sectors that employ only 17% of the manufacturing workforce. 60% of manufacturing jobs are in sectors that use just 10% of total manufacturing gas consumption.
• Australian manufacturing employment has declined since the mid-1980s when Australia had cheap abundant gas and have continued to decline as gas production has tripled over the last decade.

Figure: Gas consumption, LNG compared to manufacturing, 2019

“The Government claims it is trying to create jobs in manufacturing by giving money to the gas industry. In fact, they are just giving money to the gas industry,” said Richie Merzian, Climate & Energy Program Director at The Australia Institute.

“There is no shortage of gas for manufacturing in Australia. The problem is governments are allowing a few global oil and gas giants to export vast quantities of Australia’s more affordable gas, leaving only more remote expensive gas for Australian manufacturers.

“No-one still believes producing more gas will reduce gas prices for manufacturers. Over the last decade gas production tripled, and prices tripled along with it.

“Manufacturing jobs declined for decades when Australia had cheap abundant gas, then continued to decline when gas production tripled over the last ten years. It’s hard to think of a less effective way to create manufacturing jobs than giving money to the gas industry.

“The idea that we need gas for chemical feedstock is a complete furphy. 1 percent of gas produced in Australia last year was used for feedstock. 80 percent was used by the LNG industry.

“If the Government was serious about increasing manufacturing jobs, they would fund measures to help manufacturers reduce their dependence on expensive gas rather than handing money over to the gas industry.”