The double-whammy bill natural gas users have to pay
A controversial $200-million fund for investment in local gas exploration aims to tackle ever-dwindling supplies, but it won't be soon enough for thousands of households trapped with gas connections they don't want, a consumer expert says.
The four-year contingency fund to subsidise new fossil fuel fields was announced by Resources Minister Shane Jones at last month's Budget.
Just weeks later, the Ministry of Business, Innovation and Employment revealed that our natural gas supply is running out faster than previously thought, with latest data showing reserves have fallen 27 percent from last year.
But any new developments will take years, and gas households already face surging costs, says Paul Fuge, manager of Consumer New Zealand's Powerswitch.
Residential consumers make up only 4 percent of the country's total gas use and Fuge says it won't be running out in the near future. But that is no consolation for gas customers who are being hit in the pocket twice.
'It costs more to have gas than electricity so an electricity-only house is much cheaper to run than a gas-electricity house because you can substitute all your gas appliances for electric appliances … but you can't run a TV on gas or your lights on gas,' says Fuge.
That means gas customers have to have an electricity connection, which means double the costs of the infrastructure – gas pipes and electricity lines – needed to deliver the energy to people's homes.
Gas customers are also locked out of cheaper electricity plans because most gas suppliers also demand that customers take their electricity. The companies that provide cheap electricity don't provide gas, Fuge says.
Add to that the phasing out of low electricity charges for low users, which was a benefit for gas customers.
'What that means is people's electricity connections for the low users are getting more expensive every year over five years and that disadvantages gas customers,' he says.
Customers who are renters are stuck with gas, as are people on low incomes because they can't afford to switch, Fuge says.
He explains to The Detail why he thinks thousands of new households have connected to gas in recent years, despite rising prices.
'I wonder if it's when people are building new houses, developers may be putting in gas for various reasons.'
The Ministry of Business, Innovation and Employment does not have specific figures for new connections but based on rising residential use, Fuge calculates that the number of household connections has increased by around 18,000 since 2019, to 290,000.
Residential customers make up the smallest proportion of gas use. According to industry group GasNZ more than half a million New Zealand homes and businesses rely on gas and Liquified Petroleum Gas (LPG).
There are 300 large industrial gas customers, from methanol exporter Methanex to dairy plants and wood processors.
Newsroom senior political reporter Marc Daalder says the large industrial users are more imperilled by the declining gas supply, as well as the electricity generators that rely on gas.
He says the coalition's plans to repeal a ban on new oil and gas exploration will not solve our dwindling gas supplies any time soon.
'The fastest we've had from a conversion from finding that gas to producing that gas is 10 years and it's hard to say in 2035 we know exactly what our gas needs are going to look like.
'The reality is they're probably going to be a lot lower because we're going to be electrifying everything and some of the industries that we've got that rely on gas are going to be electrifying or closing down.'
The other option is finding more gas in the existing fields which has been going on consistently and continually for many years, including since the exploration ban was put into place.
'About a billion dollars has been spent trying to find extra gas in those existing fields and there have been a few minor successes but nothing major.'
However, two fields are showing potential new gas finds, which the $200-million government co-investment fund could boost.
'Shane Jones would really like for the Government to be able to completely revitalise the gas industry and send people out looking for brand new gas in brand new places. The reality is we haven't found any gas in a brand new place for two decades or longer,' says Daalder.
'It's not like the Gulf of Mexico where there is all this gas sitting there. The resource probably isn't that strong; $200 million isn't going to suddenly make it commercial to take that big of a gamble.'
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