Gas cartel laughs as Labor boxes itself in on energy divestiture

Via the AFR:

Labor will side with business and oppose the government granting itself powers to force the divestment of energy companies, arguing it is an ad hoc move which would have no impact on power prices and only serve as an investment risk.

The Coalition is divided on the so-called “big stick” powers with key Nationals, including former leader Barnaby Joyce, urging the laws be applied to all sectors, not just energy, while some economic conservatives are expressing concern with the decision to embrace the powers at all.

With the government keen to make power prices a key issue at the next election, Energy Minister Angus Taylor has also indicated that new coal-fired and other “fair dinkum” power projects which the government will underwrite will be known early next year, before voters go to the polls.

This sets up a contest over coal-fired power, potentially putting Labor in a position where it may have to reverse contracts.

The “big stick” is exactly what is needed in the collapsed energy market. It’s just that the Coalition is waving it at the wrong segment. The real culprit is the gas cartel which has been allowed to dominate east coast gas reserves, has brutally withheld them from domestic consumers, and mercilessly abused its market power. That has driven electricity prices wild after gas peaking plants become uneconomic, denuding the grid of its number one offset to intermittent renewable generation.

Divestiture is absolutely part of the solution. Shell should never have been allowed to acquire Arrow. Santos is squatting on Narrabri and its legacy Cooper Basin assets should never have been allowed to ship gas offshore.  When Labor comes to address this issue by clamping the ADGSM harder for lower prices, the cartel may well respond by refusing to produce some of the gas. Forced divestiture is the big stick that the government will need to wave in response.

Yet here it is taking short term pot shots at the Coalition over the issue and boxing itself in for the fight to come.

Don’t these guys study game theory?

David Llewellyn-Smith
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  1. Big stick smacks of Jeremy Corbyn and John McDonnell. There’s nothing the current ALP leadership wants to do with them. They dont even mention their names, let alone imitate any of their approach. To them that’s all pre 1983 sort of stuff, before Keating took the economic helm. For instance during the Batman by election when asked to comment on The Greens policy to bring the electricity grid back into public ownership, Mr Shorten said that would be turning the clock back to 1982. Note the year he referenced? The current ALP love waxing lyrically about Whitlam’s social reforms so they can avoid talking about his economic philosophy, part of which is the sort of state intervention it is believed is needed here. To quote Rex Connor, Whitlam’s Minister for Energy and Resources:
    Give me men to match my mountains,
    Give me men to match my plains,
    Men with freedom in their vision,
    And creation in their brains.
    I have no faith that such people exist at the top of the current Federal ALP. I am busy preparing my ALP type friends to calm down and expect a milk and water ALP government.

  2. Spineless Bill will be broken in the first 3 months, being pulled left, right and possibly centre by albo, tanya, penny and who ever else can climb on, along with a dozen or more crossbenchers to do his head in !
    It’ll be kaos with the first talk of leadership challenges before xmas !

    • So you are saying that within the first 2 months of office 75% of caucus members would want him out? as there is now also a month long balance process for 50% of rank and file members to vote against him as well. K Rudd’s legacy is that he has made it almost impossible for a sitting Labor Prime Minister to be kicked out.

      All these ‘kill Bill’ messages coming from lots of different sources. It is like the LNP have nothing left to stand on? I dislike Bill and Labor – but at least they will have a plan to combat climate change, remove negative gearing, and are slightly more inclined to govern for Australians as opposed for their Minerals Council/IPA masters!

      • bolstroodMEMBER

        I hope you are right glam, but labor is the party of Eddie Obeid, Ian Macfarlane, Mark Arbib, Carl Bitar and Ma’rn Ferguson.
        I think Rudd is correct that Murdoch and the Miners really call the shots, and I expect Shorten to comply with their wishes.

    • You do realise that if we reserve 100% of our gas supply we would have enough gas to last us over 100 years without having to drill other sources? Within 100 years gas will be a fringe energy source.

      • My point still stands. Any new gas supplies will be at a higher cost, as we had SO much gas reserves we only drilled the easy/cheap stuff. The cartel are exporting all of our cheap gas and we, the Australian population, get no benefit out of it other than no gas left for local supply driving our price up.