From The Australian comes a fresh gas price warning from the Australian Competition and Consumer Commission (ACCC):
“Gas production costs are increasing and gas prices in the east coast market are now shaped by international LNG prices, meaning that domestic prices are unlikely to return to historic levels,” ACCC chairman Rod Sims said.
Lower forecast demand and a rise in southern production in 2019 is not expected to be sufficient to lower gas prices, he said.
“While gas market conditions have improved, these market conditions can change and the reality is that more gas is required to lower prices to users,” Mr Sims said.
Gas prices on the nation’s east coast could even be at risk of increasing due to their linkage to international liquefied natural gas prices, after Queensland’s three export projects started shipping gas to customers in Asia over the last few years.
“Forecasts for LNG prices in Asian spot markets are trending up at the moment and there is a risk domestic gas price offers could increase to reflect these expectations,” said Mr Sims.
Righto, so the ACCC has identified the problem – the linkage of Australia’s gas market to international markets – but still claims that “more gas is required to lower prices to users”. But what would increasing supply actually do?
It won’t fix the issue because all the cheap supply is locked up in the gas export cartel. Any displaced volumes of locally supplied gas will flow immediately offshore via this cartel, which is operating well below capacity, or will simply be withheld until customers pay extortionate prices up to the import price.
The ACCC is supposed to be the expert regulator of market failure, cartel conduct and competition. Yet it does not appear to have the faintest understanding of how monopolies, discriminatory pricing and rent-seeking businesses work in the real world. It is a catastrophe.
All Australia needs to fix this mess is tougher domestic reservation, just like WA. Force the export cartel to leave 10% of volumes here. Use fixed price quotas if need be. Simple.
