Will Australian energy bills rise as the Middle East conflict continues?
Energy bills surged more than 40% as a result of Russia's invasion of Ukraine back in 2022. Will we see a repeat following an increase in global gas prices?
Even though Australia relies heavily on solar and coal, our electricity market operates much like an auction.
The most expensive fuel needed to keep the lights on (often gas) can end up setting the price for the whole grid.
So if global gas prices stay high, experts warn the pressure could eventually flow through to Australian energy bills as well.
The silver lining is that the impact may not be as severe as in 2022.
According to The Guardian, a spokesperson for Resources Minister Madeline King said steps have since been taken to "insulate the domestic market from extreme price hikes."
This includes forecasting enough gas supply for 2026 and "a price cap of $12 a gigajoule for new domestic wholesale gas contracts [which should] help keep a lid on bills this time."
Why are global gas prices being affected?
With fuel rationing underway in Australia and some stations running dry, we're being reminded of just how important the Middle East is for global energy.
But it's not just oil - the region is also a major supplier of natural gas.
Qatar, for example, produces around a fifth of the world's liquefied natural gas (LNG), making it the second-largest exporter after the US, and ahead of Australia.
Like oil, this gas has to pass through the Strait of Hormuz - a narrow waterway that is now effectively blocked to most commercial shipping, disrupting energy flows and pushing up global prices.
With tankers being affected, Qatar announced it was halting LNG production, which sent global prices skyrocketing.
Why is Australia so exposed if we're one of the largest natural gas producers in the world?
According to the Climate Council, Australia imports more than 90% of its refined fuel and exports over 80% of its gas, linking prices for households and businesses to volatile global markets.
Elswhere, lead gas analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), Josh Runciman, told ABC News:
"Since [2015], we've seen domestic gas prices effectively triple. That's not just due to exports. Low-cost gas that we have in eastern Australia is becoming depleted, and so now we're developing more expensive gas fields."
What's next and what should I do about my energy bills right now?
Something to keep in mind is that electricity prices are set on 1 July each year.
Draft decisions on these prices usually come out in March. Since that is this month, it is still unclear whether current events will have any impact.
The final decision will not be made until May so things can still change.
For now, the best thing you can do is check if you can get a cheaper energy deal.
Haven't compared energy plans in over 12 months?
You could be overpaying.
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