Gas cartel continues to plunder eastern economy

Via the AFR:

The weaker LNG export market has “taken the top off” domestic gas prices in the eastern states but industrial buyers are still jostling for supplies available within the new normal range of $9-$11 a gigajoule, well above historical levels, according to one of the few producers with gas to sell next financial year.

David Maxwell, chief executive of Cooper Energy, which is nearing completion of the $355 million Sole gas project off the Victorian coast, said the lower price outlook for export liquefied natural gas meant there was no longer talk of prices as high as $13-$15 a gigajoule.

Both spot and contract price for Asian gas are now trading around $10Gj despite the plunging AUD. That gives us an export net back price of roughly $8Gj. Where are these deals under the terms of the Australian Domestic Gas Security Mechanism (ADGSM) agreement?

The truth is there is no agreement. It’s all waffle; a handshake between the resources minister and his gaseous mates to not overdo the gouge.

Regulate these economic vandals out of existence. Toughen the ADGSM with a much stricter domestic reservation price target between $5-6Gj. That will also crash power prices delivering huge income relief to households and business plus liberating the decarboniation process.

The gas export cartel of STO, ORG and Shell are still treating us like their own private energy piss pot.

Houses and Holes

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.