Progress of the industry outside of Europe and the United States
In Table 3.1, it can be seen that beyond Europe and the United States, the spread of gas technology led to a range of cities around the world, many in the British Empire (e.g. Canada, Australia, New Zealand, South Africa, Hong Kong, India and Singapore), obtaining a supply of gas. The commercial production and sale of gas in Australia and New Zealand, for instance, began in 1841 when the Sydney-based AGL was founded. AGL’s heavy capital requirements meant that its promoters sought limited liability status for the company, which required New South Wales’ colonial government approval. Yet as occurred in the United Kingdom, there were no general corporations Acts in New South Wales at this time allowing for the creation of limited liability companies. In addition, permission also had to be granted to enable the company to break up streets to lay gas mains. On 7 September 1837, ‘An Act for Lighting with Gas the Town of Sydney, in the Colony of New South Wales’ was passed by the New South Wales Legislative Council, and AGL began supplying gas in July 1841. The company operated as a monopoly provider to Sydney residents throughout the nineteenth and twentieth centuries (and still operates the Sydney gas distribution network) and is an example of one of those companies that later transformed from a producer of manufactured gas to a distributor of natural gas (see Picture 3.3 to observe its main plant in Sydney, along with a typical gasometer in Picture 3.2).
The production of gas in colonial New South Wales was regarded as an innovation and therefore very speculative financially. Private enterprise was therefore seen as an appropriate intuitional form for such a risky enterprise; in Australia at the time it was not argued that government should be directly involved in the supply of gas. This view was subsequently adhered to during the establishment of other gas companies in New South Wales and in the other Australian and New Zealand colonies. The need to enable the gas companies with the right to break up streets and lay pipes, as well as incorporate as limited liability companies, meant that legislation was passed in the various colonies as part of the establishment of the gas companies. Although colonial governments did not intervene at this time to directly assist or control gas companies, they certainly acted enthusiastically to pass this necessary legislation so that private investors could develop the gas industry (Broomham 1987).
After the establishment of AGL, further gas production and distribution companies were founded in other colonial centers in Australia and New Zealand. In 1844, the first attempt to sell gas in the colony of Victoria took place when a blacksmith, George South, tried unsuccessfully to market bottled gas. A more viable, longer-term solution to supplying gas was introduced in 1850 when the City of Melbourne Gas and Coke Company was formed (Proudley 1987, 1997). In Brisbane, in the colony of Queensland, the Brisbane Gas Company was established in 1864, followed by the South Brisbane Gas and Light Company Ltd in 1885. After much competition between the two Brisbane companies over marginal territory, they settled on sharing the Brisbane market after an agreement was made in September 1889. This division of Brisbane into two separate distribution areas is still a feature of the city’s natural gas supply network (Keating 1974).
In the colony of Tasmania, a bill was passed through parliament in October 1854 incorporating the Hobart Town Gas Company - the first street lighting in that city was ignited on 9 March 1857 (Keating 1974). This company was to continue to supply gas until the 1970s. In the colony of South Australia, supporting legislation was passed for the incorporation of the South Australian Gas Company in November 1861, followed by the Provincial Gas Company in 1868 - the latter supplying regional towns in South Australia. In 1877, the two companies in South Australia were merged (Donovan and Kirkman 1986). In the capital city of Western Australia, Perth, the Perth Gas and Coke Company began supplying gas in 1885. The company was later taken over in 1912 by the Perth City Council, which in turn sold it to the State Electricity Commission of Western Australia in 1948.1
Apart from the colonial/state capital cities a number ofindependent companies established gasworks and pipe networks in smaller, regional urban centers. Many of these gasworks continued in operation until the 1970s, when they were replaced with the supply of natural gas. At the time of World War I, there were 115 gasworks operating in Australia (Australia, Commonwealth Bureau of Census and Statistics 1910).
In New Zealand, the gas age began when the Dunedin Gas and Coke Company, and Auckland Gas Company, were formed in 1862. The Christchurch Gas, Coal and Coke Company followed in 1864, and another in Wellington in 1870. Gas companies were established throughout the late nineteenth century in New Zealand, in a similar fashion to Australia’s gas company rollout.
Competition between rival gas companies was rare in Australia and New Zealand, just as it had been in the United Kingdom; although it did occur during two brief periods in Brisbane and Sydney. The main attempt by an Australian gas company to directly compete against an incumbent occurred in the early 1860s when the new Sydney Gas Company attempted to compete against AGL, with the new entrant going bankrupt in 1863. There was also a brief instance of competition in Brisbane, as previously mentioned. Subsequently, when they were established, new gasworks companies attempted to supply consumers that had not been previously supplied. Gasworks therefore sprang up all over the country.
In Australia and New Zealand in the nineteenth century, the preference was for private companies to supply gas, although local municipal councils did become involved if this interest was not forthcoming. Decisions to invest in the provision of gas were generally made at the local level, with local businessmen raising the capital to establish gasworks. The colonial central governments normally restricted themselves to passing legislation that enabled the companies to incorporate and to lay pipelines. Local government authorities were, however, the principal consumer of gas at this time (for street lighting); thus, if private business interests were not able to raise the capital, then often local governments established gasworks. This was especially common in the smaller populated states of Western Australia and Tasmania, and in the regional centers of New South Wales, Queensland and Victoria.
One contrast to what was occurring in the United Kingdom at this time was that in Australia and New Zealand, no attempt was made to regulate the price of gas. An explanation for the absence of gas market regulation of pricing in the nineteenth century might simply be that as gas was used mainly for street lighting, there was little political pressure for price regulation. In practice, local municipal authorities had a large degree of monopsony power with which to bargain with private gas companies. The gasworks, after all, would have needed local councils’ street lighting contracts to survive. What evidence there is suggests that gas prices decreased substantially through the nineteenth century. For instance, in the city of Sydney the rate at which AGL charged for street lamps fell from ?10 per lamp per annum in 1864 to ?6 by 1885. In New Zealand, a similar progressive fall in prices occurred. In Christchurch, for example, gas prices fell from 20 shillings per 1,000 cubic feet in 1867 to 12 shillings 6 pence in 1883, 7 shillings 6 pence in 1893, and only 5 shillings 9 pence by 1914. However, this does not mean that some gasworks did not possess a degree of market power. It could have been that technological progress in the industry meant that costs fell at a greater rate than prices did (Pollard 1987).
This process of replacing gas with electricity for public lighting purposes accelerated during the 1890s in Australia and New Zealand. By the outbreak of World War I, gas street lighting had been almost completely replaced by electricity in these countries, which encouraged gas companies to promote alternative uses of gas, such as for domestic cooking and heating. As demand for gas shifted away from public to domestic purposes, the pressure for the introduction of regulation of pricing in most countries (including Australia) increased.
In addition to Australia and New Zealand, other parts of the British Empire also established gasworks in the nineteenth century. In Canada, Montreal gas lighting was introduced in 1836 - a number of years before Sydney in Australia - and gas suppliers subsequently spread to other Canadian cities. Other major urban centers in the British Empire such as Cape Town in South Africa (1845), Calcutta (1854) and Bombay (1854), Singapore (1861), and Hong Kong (1862) also established gasworks in the nineteenth century (see Table 3.1). Eventually, the supply of town gas also spread to other non-British empire cities, with the most noticeable being Shanghai in China (1865), and Tokyo in Japan (1885). By the end of the nineteenth century, most urban centers in the world had their own gasworks and distribution network.