As the mighty gas gouge threatens the east coast economy, the ironies abound. Via The Australian:
BHP Billiton is facing a more than doubling of east cost power prices because of the dwindling effectiveness of the National Electricity Market and rising gas prices.
The mining giant has called for government subsidies to increase South Australia’s power supply reliability and prevent costly outages like the one that wiped $US105 million off the big miner’s first-half profit.
The call, made in a submission to Chief Scientist Alan Finkel’s review of future security of the NEM, came with the revelation that BHP’s power bill at the Olympic Dam copper and uranium mine in South Australia is expected to rise by $US30m ($39m) this year because of higher gas prices and the cost of contracts that offset the risks of power price spikes.
“It is the combination of underlying gas price increases and the overall mix of generation capacity in South Australia and the intermittency that comes with that,” BHP’s head of Australian mining, Mike Henry, told The Australian.
…But it says gas reservation is not the answer.
“Australian governments should ensure that policy and regulatory settings support open and transparent gas markets, and avoid interventions that impeded access to supply (such as moratoria and prohibitions on onshore gas development) and dull incentives for innovation and investment (for example, gas reservation policies),” BHP says in its submission.
With respect, BHP, you’re the one doing the gas gouging that is driving up electricity costs. You own the Gippsland JV with Exxon and are another member of the east coast cartel:
For instance, AGL had a 13 year contract for gas up until 2018. The settlement to renew it was made mid-last year on the much less secure basis of a three year term. Prices were not released but we all know what happened, from the ACCC report:
Declining production in the Otway and Bass basins, redirection of gas from the Cooper Basin to Queensland, moratoria and other regulatory restrictions on on-shore gas exploration and development in New South Wales, Victoria and Tasmania have combined to severely reduce the availability and diversity of supply in the southern states. This means that domestic users in the south are becoming highly reliant on gas produced by the Gippsland Basin Joint Venture (GBJV).
In these circumstances, there is unlikely to be sufficient competition in the south to constrain the GBJV from charging a price approaching the buyer alternative. This means that to increase competition and put downward pressure on prices, changes are needed to encourage increased supply and a larger number of suppliers to the domestic market, particularly in the south.
And in the recent SA power outage, it was gas as a “peaking power” source that failed in part because it just costs too damn much:
We need cheaper gas for peaking power not BHP balderdash.
Also, there is via The Australian:
The oil and gas industry has engaged lobbyists and advisers Crosby Textor to study a mining tax-style campaign that would be pursued if Scott Morrison’s petroleum resource rent tax review results in increased taxes on $200 billion of LNG investment built over the past decade.
Several industry sources have confirmed that the Australian Petroleum Production and Exploration Association had been formulating a strategy with the firm over the issue in recent weeks, something neither the industry association nor Crosby Textor would confirm.
The PRRT review, by former Treasury executive Michael Callaghan, is due to report in April — a timeline which has stoked concerns in some industry quarters that the Treasurer may include new revenue assumptions from any changes to the tax in the coming May budget.
Honestly, this has zero prospect of getting traction:
- it’s a Coalition government so the measures will have bipartisan support;
- gas does not hold the same magical appeal as dirt;
- there are no boganaires to defend it;
- it’s already gouging the life out of everyone via utility bills.
Save your dough, fellas.
