The first gasworks were erected in 1862 at Auckland and, by 1869, there were works in Wellington, Christchurch, and Dunedin, increasing to 56 in 1916 and, since then, declining to 29 in 1964. Nine are run by limited companies, 11 are combined with electricity supply (nine municipalities and two power boards), and 10 are run by municipalities and are not combined with electricity.

Electricity was first generally used for lighting, but from 1919 onwards it gradually competed more successfully with gas in heating and cooking. Electricity shortages during the Second World War halted the trend away from gas; the amount sold increased until 1948, then declined until 1955, remained steady for two years, and has since steadily improved. In 1956 the Government declared all but two gasworks were essential. In the four years ended December 1964 gas production increased 4·7 per cent to 5,872 million cu. ft. The importance of byproducts in gas manufacture must not be overlooked, particularly the 2·2 million gallons of tar and the 79,000 tons of coke a year. There were about 150,000 consumers in 1964.

The Gas Supply Act of 1908 and the Gas Industry Act of 1958 are the only two Acts which apply generally to the gas industry. The latter Act, to maintain and perhaps increase the gas industry, is administered by the New Zealand Electricity Department. A Gas Council was set up, its main work being to advise the Government on gas matters, and generally to assist and advise owners of gasworks. The Minister of Electricity is Chairman. Five members represent Government Departments; two, the Gas Association of New Zealand (Inc.); and one each, the Gas Institute of New Zealand (Inc.) and the Federation of Labour.

From 1943 to 1950 individual gasworks were subsidised. From 1951 a subsidy of 2s. per 1,000 cu. ft. of gas sold was paid until the setting up of the Gas Council. The subsidy paid by the Gas Council was reduced to 1s. 8d. per 1,000 cu. ft. in 1959 and is regarded as being paid to help to supply gas at a price reasonably comparable with electricity. The reduction provided funds for a coal freight equalisation subsidy to reduce freights to the average for each Island; this helps inland works with high rail costs. Prices for gas-making coal were stabilised until 31 March 1964 and again from 1 April 1964. To cushion the effect of this change, a coal price support subsidy was introduced diminishing by one-fifth each year. The Gas Council meets the payment of interest and repayment charges for specified periods on loans raised for approved new plant, where more efficient operation will result.

Natural gas from Kapuni in Taranaki could probably change the future for the gas industry in the North Island, and a decision about its use as a premium fuel is imminent (August 1965). If it proves practicable and the price is right, the problems faced by the industry where natural gas is available will no longer be ones of economic survival against domestic competition of electricity and of industrial and commercial competition with oil.