RBA pumps gas propaganda into your pipes

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Wow, this is poorly thought through on pretty much every level. From the AFR:

The world’s biggest energy companies have launched a multimillion-dollar advertising blitz warning that high costs could jeopardise the $150 billion gas boom, in a campaign reminiscent of the mining tax fight.

The Australian Petroleum Production and Exploration Association (APPEA) campaign warns approval delays, rising labour costs and “anti-gas misinformation” will jeopardise 150,000 new jobs and $40 billion in annual exports. “For too long, vocal minorities have dictated public policy – the tail has wagged the dog,” BG Australia chairman and Reserve Bank of Australia board member Catherine Tanna told The Australian Financial Review. “The gas industry is too im­portant to Australians’ well-being, jobs and economic future to be treated like a political rag doll.”

The industry points to examples such as the approval of QGC’s liquefied ­natural gas plant on Queensland’s Curtis Island, which took two years, 4000 meetings and a 1200-page, 65-kilogram report that needed a wheelbarrow to deliver it.

Labor and the Coalition have ­promised to simplify environmental assessments and cut red tape, yet ­Parliament recently increased the regulation of water for coal seam gas projects. Parliament passed the laws with opposition only from the greens – which wanted to strengthen it.

…The campaign seeks to make the gas boom an election issue by asking the public to sign up via a website that sends their views to local MPs.

Let’s start at the top. What is an RBA board member doing involved in a political campaign by a vested interest? I have supported having a few of these folk on the board given its good track record but this is ridiculous. The RBA’s brand is now being deployed in the service of vested interest propaganda. It compromises the Bank’s independence. It compromises its integrity. It compromises its role as a setter of ethical normatives.

Now, let’s take a look at the objectivity of the claims made by APPEA (and the RBA). The only sovereign risk survey I know of against which we can measure the gas propaganda is that of century-old mining consultancy Behre Dolbear. Here are the results of its recently released 2013 survey:

Capture

So, Australia comes in at number one, the best place to do mining in the world. OK, it’s not gas specific, but there are broad areas of cross-over. Does it really stack up to say that Australia is lagging other countries so much when it currently hosts seven of the world’s twelve LNG plants under construction and is set to become the world’s largest LNG exporter by 2017?

Referring again to the Behre Dolbear report, Australia comes in at first or second on every category: economic and political system, social issues, permit delays and corruption and currency stability. It ranks much further down the list for its tax regime but is stable and very obviously offset by other factors.

Next, let’s ask if this campaign is itself a useful idea for the gas sector. Is gas the kind of visceral household issue that could swing votes? Electricity prices perhaps but not gas, surely. And the link between the two isn’t obvious enough to make it stick. Moreover, what exactly is the campaign’s goal? It’s not targeting one specific issue so lacks focus (“costs” is too vague). Perhaps it’s aimed peripherally at the increasingly loud manufacturing campaign for gas reservation? But again, that’s not going to swing votes. Nor is it aimed at one government or policy (though the timing makes it pretty obviously it’s directed at federal Labor).

None of this is to argue that Australia does not have high costs. It most assuredly does. Wages are sky high for LNG producers and so is the currency. But if the industry is going to build seven LNG plants simultaneously in remote areas, including massive duplication in places like Gladstone, then what does it think is going to happen? The truth is Australia’s gas regime has proven to be so generous that the mad rush to develop has created a cost bubble. This is the contradiction at the heart of the propaganda.

2013 Ranking of Countries for Mining Investment

David Llewellyn-Smith
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Comments

  1. Agree, if the RBA are short of things to keep them busy they could spend more time talking about the damage done by a dysfunctional market in land.

  2. Stephen Morris

    From the extract published above there is no suggestion that Ms Tanna was claiming to speak in her capacity as an RBA board member. She was speaking in her capacity as chairman [sic] of BG Australia. Whether or not one agrees with her views, this is a perfectly reasonable thing for her to do.

    This may raise a question of whether the RBA ought to have industry representatives on its board and whether that may create unacceptable conflicts of interest, but I can see no suggestion that Ms Tanna was claiming to represent the collective view of the RBA in these comments.

    p.s.

    Australia’s sovereign risk may be low for politically influential companies with Mates in government, but not for mug citizens. Just ask the thousands of Queenslanders who invested in solar panels on the basis of a feed-in tariff which was enshrined in legislation and who now face having it removed retrospectively!!

  3. 1200 page 65kg report?
    they must have used some real fancy paper (962 gsm), or maybe they saved it to a hard drive from the 70s.

    • Yep… 4,000 meetings in 2 years is pretty impressive too – 5 and a half meetings every day, not even pausing for weekends.

  4. bolstroodMEMBER

    APPEA may be getting nervous . Information from USA indicating that the viability of US gas resource has been grossly talked up.
    Gas wells in US are not lasting as long as forecast.Obama’s speech telling of 100-200 years supply is being shredded by on ground well results .Many hundreds of new wells are having to be drilled to maintain contracts.The same may be true of Australian LNG Ponzi is a word being bandied about.
    As for the RBA my understanding is that it is a privately owned organisation. If this is correct it will be answerable to it’s share holders.

  5. Only tangentially related, but Gasland Part 2 was just released in the US. I wonder if it’ll get a screening here in the fracking sensitive areas.

    • bolstroodMEMBER

      Gasland 2 will definitly be screened in the Northern rivers of NSW

      It’s already on Utube.Metgasco are trying to counter it by importing bulk copies of the CSG industry’s film Frackland which is a rebutal of Gasland #1

  6. Tanna is just channeling her inner Obama – at least the US is enthusiastic about the growth opportunities new energy resources provide.

    Of more importance is the failure to address the ludicrous regulatory burden – this must be remedied.

    Ps. Fraser provides a mining risk report that is well regarded within the sector – two Australian jurisdictions do well – WA and SA. The Fraser report is more detailed therefore more valued and a number of regions do better than Oz albeit many do far worse.

  7. So the gas industry wants no environmental or regulatory restraints and don’t want to set any gas aside for domestic users. Nothing unusual or unexpected about this, It is up to the government, however, to put them in their place and look after Australias national interest – including protecting farmland for future generations and ensuring local manufacturers and citizens have access to reasonably priced energy.