Without challenge, myth can quickly become fact. Comments made by the West Australian DomGas Alliance are misleading and outright mischievous ("ACCC misses competition for Gorgon gas", Letters, July 22).
The Domgas Alliance comprises large industrial users of natural gas in Western Australia including Alcoa, the Dampier-Bunbury Pipeline, Alinta, Burrup Fertilisers and Fortescue Metals, companies that have enjoyed record profits and record prices for the products they sell partly because of some of the cheapest natural gas prices in the world.
It could reasonably be expected that an organisation concerned about competition would welcome a third natural gas supplier into the domestic gas market. Not so the DomGas Alliance, which immediately raises questions about their real objective. Is it to achieve greater competition in the market or is it about securing sub-economic supplies of natural gas? The fact is that this new source of domestic supply would not have become available without the driving force of the export liquefied natural gas market.
Referring to the Gorgon partners as a "cartel" is a very serious allegation indeed and demonstrates a disturbing ignorance of the way joint ventures operate. Even more so is the inference that Australia's competition watchdog, the Australian Competition and Consumer Commission, is less than competent and the victim of political interference.
Joint marketing of natural gas in a small market with very few customers and suppliers has served the industrial users of Western Australia well by guaranteeing long-term secure supplies of natural gas. In an ideal world with a large number of producers and a large market, joint marketing would not be necessary.
In considering joint-marketing the ACCC applies a public interest test. The ACCC will approve a jointmarketing arrangement only if it is satisfied that it will result in a benefit to the public that outweighs any detriment resulting from any lessening of competition. The fact that natural gas prices in WA have, until recently, been some of the cheapest in the Organisation for Economic Co-operation and Development under a joint marketing regime, clearly puts paid to the assertion that joint marketing results in uncompetitive prices.
The DomGas Alliance complains that the majority of the natural gas market in WA is supplied by two producers. This is the same group that strongly urged the previous government in WA to introduce a policy that requires the large producers to reserve natural gas for the domestic supply; an intervention that serves to reinforce the dependence on a few large suppliers and discourage the new entrants that are so critical to increasing supply diversity.
Concerns raised in relation to joint marketing are part of a campaign that appears to be less about the development of efficient and competitive markets and all about large, profitable companies seeking to have the natural gas industry subsidise its input costs. You can't blame them for trying but the hypocrisy of these companies in seeking to have the price of natural gas held artificially low while they enjoy market prices for their goods is becoming increasingly apparent.