LNG’s final insult arrives

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Via The Australian:

Rebounding global oil prices are set to deliver an $8.1 billion windfall to export revenue over the next two years, as the nation’s expanding LNG sector gets a double benefit from rising output and higher prices, helping boost export revenues to a record $238bn this financial year, the federal government’s commodity forecaster says.

The new figures were revealed yesterday in the June quarterly report by the Department of Industry, Science and Innovation’s Office of the Chief Economist.

The export boost is good news for liquefied natural gas exporters Santos, Origin Energy, Shell and Chevron on the east and west coasts.

And it will provide more company tax and Petroleum Resource Rent Tax to the federal government, although this will be limited by big deductions for the LNG exporters after the construction binge over the past decade that is boosting volumes.

No it won’t. The PRRT is gamed on the west coast by transfer pricing and gutted on the east coast thanks to profitless exports.

And that’s LNG’s final insult to the country. Even as it adds no profits, it will raise the terms of trade and currency, reducing net income from other export sectors:

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Honestly, we’d better off shutting down the entire industry.

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.