McKibbin: US gas to hit Australia

Advertisement
profilepic

What is it, national MB day today? From the AFR, Warwick McKibbin is out with another warning that will be familiar to readers:

Professor McKibbin said the expected massive expansion of shale gas in the US would reduce the price of world gas prices from 2016 onwards.

This would cause manufacturers and other energy-intensive industries to switch to gas-fired power from coal-fired power and hurt Australia’s coal prices and export volumes.

“From Australia’s point of view this shock in the US reduces Australia’s terms of trade by about 8 per cent over the next couple of years,” professor McKibbin said.

He went on to say it will weigh on the dollar and its good to see him doing his part. Sadly, I suspect it’ll weigh on more than just that.

Advertisement
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.