The Institute for Energy Economics and Financial Analysis, an anti fossil fuel lobby disguised as an energy economics research firm, made headlines last week with findings that Australian consumers were paying 65 per cent more than Japanese users for Australian gas.
The problem is the analysis appears to be based on a comparison of two wildly different figures: the average of the spot wholesale gas prices in Adelaide for the month of July and the raw Japanese import price for LNG.
Outrageous, IEEFA concluded, and accused gas producers such as Santos, Origin Energy and the ExxonMobil/BHP Billiton Bass Strait venture of holding “a cartel-like grip on pricing which they are exploiting to the full”, to the detriment of good ol’ Aussie manufacturers. The group went on to label the industry’s push to open up onshore gas production as “unnecessary”.
…Adelaide-based Consultancy EnergyQuest has completed a counter-analysis, to be published on Friday, which finds that Tokyo Gas quotes a standard residential price of ¥4600 a month for 32 cubic metres of gas, which works out to $41.67 a gigajoule for households. That’s 69 per cent higher than the average price paid by EnergyQuest principal Graeme Bethune’s household in the May-July quarter.
An unfortunate consequence of the misinformation peddled by IEEFA is that it detracts from the real problems faced by industrial gas users in Australia. They are struggling with rising prices, inadequate offers of contract duration and a lack of choice on supply.
Nice bit of editorialising about the IEEFA there. We might just as easily state that the AFR is a ‘commodity producer lobby disguised as a newspaper’, especially since it slams folks for identifying the cartel before admitting itself that there is one. Where’s its attack on the ceaseless misinformation peddled by the oil and gas lobby?
Claims by the IEEFA notwithstanding, the cost of raw Aussie gas was indisputably higher at home than it was in Japan:
The trend is up and the last train on Curtis Island has not even been commissioned. I could point to Europe or the US to find cheaper gas that used to be more expensive than here.
And, BTW, more local gas is not the answer unless you are beholden to the oil and gas lobby or can answer the following:
how can it be kept here without reservation?
is there so much of it that it can lower global prices (obviously not)?
is it cheap enough to make a difference?
and, is whomever produces is not already part of the cartel (as in the case of STO at Narrabri)? Or big enough to break it?
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.
