June 15, 2008 - 1:18PM
Western Australia's gas crisis will hit hard this week as high energy costs force businesses to decide whether to shut down and lay off workers, the state government has warned.
The WA Chamber of Commerce and Industry (CCI) has estimated 14 per cent of 83 companies it recently surveyed may shut down or will be shutting down soon.
Apache Energy says it will be two months before partial gas supplies are resumed at its Varanus Island gas plant, where a June 3 explosion cut off one-third of the state's domestic gas supply.
WA Premier Alan Carpenter said Sunday businesses which switch from gas-fired electricity to diesel fired electricity will face far higher electricity costs.
"Diesel-fired electricity is far more expensive than gas-fired electricity, so businesses will be making the decision as to whether the increased cost they are going to have to pay for energy warrants them shutting down for a while, or scaling down their production for a while, or standing down their staff for a while," he told reporters.
Unions WA secretary Dave Robinson has said hundreds of workers have already been laid off at laundries, in the meat industry and in timber-related industries.
He has predicted the number could soon run into the thousands.
Federal Resources Minister Martin Ferguson met with Mr Carpenter on Saturday and said Centrelink was on standby to help out if the situation worsened and large numbers of workers were laid off.
Mr Carpenter said the next two weeks would be very hard.
"It's taken a while for the impact to wash through, but it's really coming upon us now, economically. This week, I think will be very difficult."
On Saturday, the Australian Navy freed up six megalitres of diesel to be fed into the market for distribution to companies that could use it.
The state's total normal diesel consumption is about 10 megalitres a day.
The WA government has set up two response groups - one to handle the social and human consequences of the crisis and another to take phone calls from retrenched workers and those expecting to lose their jobs.
It also has a committee in place to manage the state's remaining gas supplies, with members including the WA Office of Energy, Apache Energy and power station operator Verve Energy.
Companies affected by the crisis are expected to make substantial insurance claims.
A blast at the Apache Energy plant on Varanus Island on June 3, 2008 cut off one-third of Western Australia's (WA) gas supply, Apache Energy says that it could take up to two months before the supply from Varanus Island gas plant will be partially resumed.

The gas crisis in Western Australia is set to worsen this week, "I think the most difficult times are ahead of us. I think this week will be very difficult and I think the following week will be very difficult, and I mean very difficult", The WA Premier Alan Carpenter said.