The Gas Industry

Press, Volume LXXXIX, Issue 27169, 13 October 1953, Page 8

The Gas Industry

The discussion in the House of Representatives on the future of the gas industry after the subsidy is withdrawn was not particularly enlightening. Although it is to be hoped that the confidence of the Minister of Industries and Commerce (Mr Watts) on the ability of the industry to carry on successfully is justified, he gave no clear reason for it. The Opposition members were, perhaps, not unnaturally, more concerned with the effects of the subsidy withdrawal on users of gas and ratepayers, who have votes, than with the ability of the industry to play its full and important part in the production of New Zealand’s requirements of fuel and power, coke, and chemicals. The subsidy, which is to “ peter out ” next March, was given by the Government when the subsidy on coal was withdrawn in 1950. Of the £600,000 a year

voted for this purpose, £470,000 has been used to keep the retail price of gas down to the 1950 level by a consumer subsidy of about 2s for 1000 cubic feet; and the remainder was used to help various undertakings finance capital improvements or improve technical efficiency. The replies by Mr Watts to the House referred particularly to these capital works, by which, in his words, “ the gas companies have “ been able to rehabilitate themselves after plant had deteriorated “in the war years”. Though more efficient plant may help to keep the cost of gas down, it seems obvious that there must be some increase in prices when the consumer subsidy comes off.

This may not affect the stability of the gas undertakings, because their competitive position has been much improved by the recent heavy increases in retail electricity prices, which amount in the aggregate to something like five times the amount of the gas consumer subsidy. If gas users have to meet relatively the same increases as users of electricity they will have no special complaint about the results of a generally rising price level. Any marked reduction in the use of gas would be serious both because of the heavy additional demand it would put on the already strained resources of the electricity system and because of its effect on the capacity of the gas industry to produce economically its important by-products. Seven per cent, of New Zealand’s usable output of energy comes from gas, compared with 22 per cent, from electricity. An even higher proportion would probably be in the interests of New Zealand. The annual report of the Department of Industries and Commerce does not altogether support the optimism of Mr Watts, because it shows that in 1951-52 sales of gas fell by about 10 per cent, and were easily the lowest annual figure since the war. Has the industry recovered this ground? What are its prospects of expanding sales in proportion to population? These questions were not answered in the House of Representatives. Certainly nothing was said to answer the strong case made two years ago by the Roya] Society of New Zealand for a complete investigation into the sources and uses of New Zealand’s fuel and power, an important part of which would be the future of the gas industry.