Capping Gas Profits Is Not a Good Idea for These Reasons

Commentary
Australia’s key decision-makers seem intent on making the worst decisions that they can for the energy sector.
The latest federal government plan is to cap gas prices to $12 (US$8) per gigajoule (GJ). Simplistically they think that forcing gas companies to sell at a lower price will combat the increasing cost of living that is burdening Australian families.
The government speaks about prices like they are set by greedy gas companies. But the situation is much more complicated as prices are determined by consumers as well as suppliers.
The gas spot market is a perpetual auction—yes, sellers present to the market the lowest price they are willing to accept. But purchasers also present a bid to purchase the gas at the maximum they are willing to pay….