Melbourne wool processor fears soaring gas prices will wipe out this year's profits
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A Melbourne-based wool processor says soaring gas prices are likely to wipe out any profits it will make this year.
Laverton North-based Victorian Wool Processors was almost forced to close its doors before Christmas, as it desperately searched for a company to supply it gas.
A last-minute contract means the company has remained open and the company's 35 staff remain on the payroll.
But the company's general manager David Ritchie told the ABC the new contract meant the price of gas had increased by 110 per cent between January and December 2016.
"To give you an idea, it works out at about $18,000 per employee with just that increase alone," he said.
"The owner of this company has said, knowing we won't make any money this year, he'll keep it operating this year and see what happens."
Stoush over gas supply continues
A political fight has erupted over gas supplies, with federal Resources Minister Matt Canavan telling states and territories such as Victoria, New South Wales and the Northern Territory to "pull their finger out" and open up land for on-shore gas exploration.
On Wednesday Prime Minster Malcolm Turnbull called Victoria "the worst example" of a state with plentiful gas reserves, but a ban on developing them.
Victoria's Energy Minister Lily D'Ambrosio fired back, accusing the Government of siding with multinational gas companies instead of local manufacturers.
The Prime Minister said Australia's gas companies could risk their social licence to operate if the domestic gas supply remained low.
Mr Turnbull is meeting with executives from the sector in Canberra and will push them to take the lead on finding a solution to a potential energy crisis.
Agribusiness concern
Mr Ritchie said it was frustrating to watch Australia's gas sold offshore while he battled to keep his business running.
"The information that I'm getting is the overseas Asian market is oversupplied and the price is falling, while we're going exactly the opposite way," he said.
"My competitors are faced with reduced gas prices, while I'm facing increased gas prices, and when it's Australian gas they're using, you shake your head and wonder, 'What policies have we got in place?'"
ASX-listed fertiliser and explosives manufacturer Incitec Pivot has previously joined other major manufacturers in backing a domestic gas reserve scheme, something the gas industry is fiercely opposed to.
More recently, the Government has not ruled out the gas reservation option, and it has the support of Opposition Leader Bill Shorten.
Canadian-owned dairy processor Warrnambool Cheese and Butter told an ACCC inquiry in December, "Due to government policy restricting gas exploration, it is expected that the WCB's cost of gas for its production facility in Victoria will increase by 50 per cent from 2018.
"This will in turn negatively impact the milk price paid to suppliers," it said.
The Victorian Farmers Federation backs its State Government's moratorium on onshore gas exploration, and the NT Cattlemen's Association wants farmers to be able to veto exploration on their land.
Smaller manufacturers like Mr Ritchie hope the issue does not dissolve into political point-scoring.
"You hope that everyone goes there with good will, and the seriousness of this situation will prevail over the participants, and they'll come up with a rational solution," he said.
Topics: wool, agribusiness, dairy-production, oil-and-gas, electricity-energy-and-utilities, laverton-north-3026, melbourne-3000, sydney-2000, adelaide-5000, perth-6000, brisbane-4000, darwin-0800, hobart-7000
