Some of Australia’s largest companies face significant risks from their over-reliance on gas, and will struggle to keep the lights on in the face of upcoming gas shortages and price rises. 

A new report from the ethical share broker SIX, Gambling with Gas: the risky bet for ASX companies, highlights which ASX companies are leading in the shift away from gas, and which companies are lagging behind. 

The top 5 take-aways from the Step Off The Gas report

1. Most ASX-listed companies remain overly reliant on gas as an expensive and unreliable energy source. 
2. Lagging companies gambling with gas don’t have a plan for how they’ll keep operating through gas shortages and price rises - and even leading companies aren’t transitioning fast enough to avoid the threatened gas shortages and price rises.
3. Too many companies are relying on unlikely solutions outside of their control, like construction of multi-billion dollar pipelines through farmland or buying Australian gas back at international prices. These don’t make sense when the technologies already exist to reduce or remove gas use.
4. Companies gambling on gas include those that produce our food, manufacture our health devices, and help build our homes. These are companies that could shutter, like others already have, if they continue to remain at the mercy of the gas industry.
5. Australians will pay the price if companies don’t shift away from gas, through higher prices, loss of services, and potentially large investment losses in their superannuation portfolios.

Gas shortages are predicted to hit as early as 2028 in states like NSW and Victoria, and by 2030 in WA. The Federal Government says gas prices will continue at today's high cost, and are likely to continue rising in the future.

SIX CEO Adam Verwey said “Many private and overseas companies have been making the shift away from gas for many years now. Yet most of Australia’s publicly listed companies continue to gamble on gas. Even the leading companies aren’t shifting fast enough to avoid the gas price spikes and shortages predicted as early as 2028. Gas is a gamble for Australian companies, their shareholders and their customers.”

“Shareholders and customers will pay the price if these companies continue gambling with gas.”

“There’s a very real risk that gas dependent companies will grind to a halt when the shortages hit in as little as 3 years.” 

“These companies produce our food, manufacture our health devices, and help build our homes. There are aged care companies who may not be able to provide hot water or heat for elderly residents.”

“It’s a triple-whammy where everyday Australians will see vital industries grind to a halt, higher gas prices passed on to them as higher costs, and they’re going to see their superannuation balances suffer as well. Some of the companies most at risk from gas shortages are among the biggest holdings in super funds.”

“The government has just approved an enormous gas project on the North West Shelf. This is great news for gas producers, but does nothing for gas users because the gas is going to be sold overseas while Australian industry remains hostage to the volatile gas industry.”

Christina Hobbs, the GM of Advocacy at Future Group, which manages $15 Billion in investment and retirement savings, said “Companies that remain heavily dependent on gas without credible transition strategies risk becoming financially unviable. The Australian Energy Regulator has already warned of a ‘gas network death spiral’ occurring, where remaining gas users within the system become subject to higher and higher prices as gas use continues to decline.”

“As long-term investors, we expect the companies we invest in to adequately respond to the environmental, transition, and financial risks that gas use presents.”

The report can be viewed at https://www.six-invest.com.au/gambling-with-gas-report