Gas cartel screams with laughter as Asian prices crash, local soar

You losers! That must be what the gas cartel is thinking as Asian LNG prices crater owing to oversupply:

Reuters is reporting that Asian LNG spot prices have now broken the US$5.00 per million Btu mark. A lack of growth in demand and continued high levels of supply have been the primary causes of the recent price slide which is now in its 13th week.

Asian LNG spot prices for May deliveries reportedly dropped 80 cents this week to US$4.65 per million Btu. This marks their lowest level since May 2016 and is also not far off the record low for Asian LNG spot prices which dates back to 2010 (US$4.00 per million Btu according to Refinitiv Eikon data).

Europe usually trades at a premium to spot Asian LNG prices, however this is currently not the case as Asian prices are currently lower than the current price level of the European natural gas hub in Britain and the Netherlands.

The Australian export net-back price has now plunged to $4.80Gj. Yet the east coast spot market is going the other way, up 5% on last week to $10.50Gj. Hahhhahaha!

Gas is not only the key input price into local manufacturing, it is the key input price into east coast power prices for every household and business because gas sets the marginal cost in the national electricity market (NEM). Gas is always the most expensive fuel source in the auction bidding system that drives the wholesale power market and sets the price for all other fuel sources.

Meanwhile, a totally idiotic press is stuck in the political artifice of renewables versus coal driving price rises.

The first act of Labor in power must be to drop an anvil on the gas cartel from the highest available point using a toughened Australian Domestic Gas Security Mechanism (ADGSM) with  a fixed price cap of $5-6Gj.

This national joke has gone on long enough.

Comments

  1. “You losers! ” – depressing but true. and i bet MSM will not be highlighting it as one of the major issues.. we will never be competitive again.

  2. proofreadersMEMBER

    Can HnH remind us of which of the LNP and/or Labor parties showed their “smarts” by not reserving gas for domestic consumption and thereby sending Strayan users to purgatory?

  3. DefinitelyNotTheHorribleScottMorrisonPM

    Reservation will scare off ordinary mum and dad gas companies with taxable incomes of less than 80b, who won’t then invest in gas extraction. This will send prices SOARING for ordinary mums and dads everywhere. Don’t yous know nuffink?

    • Jumping jack flash

      I think it speaks volumes about the degree of control the government has over the country, when in order to do anything about anything they need a royal commission.
      Why can’t they just tell these greedy companies what to do? Or better yet, directly manipulate the problematic market by playing in it. If the government started selling gas for cheap and gained market share, watch how quickly the private companies would follow suit.

      But that wouldn’t be right, would it? It would require politicians to actually do something. It would require them to actually know something about the principles of their portfolios. It would require them to learn about how to actually manage their portfolios.

      RCs are easy, you just declare one, select who does it, and then sit back and wait until its all over. Then, maybe, you release the results, and maybe, you do something about it based on the recommendations someone else made. It is the ultimate govern-but-not-govern solution for government!

  4. Jumping jack flash

    “Australian Domestic Gas Security Mechanism (ADGSM) with a fixed price cap of $5-6Gj.

    This national joke has gone on long enough.”

    Agree completely.

    But, but, but, free market economy. Companies are free enterprises in this free country who are just trying to grow freely… they should be able to freely charge whatever the market will bear. Just because they’re supplying an essential good for sustaining life shouldn’t matter, they’re just lucky. This is the lucky country.

    Grab your copy of the Red Book. All praise Chairman Shorten!

  5. Asian LNG pricing is linked to the price of oil with a ~3-month lag.
    Brent Crude hit a low of US$50/bbl on the 24th of December, so current LNG pricing reflects that short, sharp fall. In 3 months time, LNG will be sold for closer to US$9.25/GJ (A$13/GJ).

  6. RenewEconomy is funded by solar panel factories – and solar power is very cheap when the fake Greens bother to conduct solar power auctions – and deliberately ignores the fact that gas is needed to produce electricity between sunset and sunrise.

    Pumped hydro probably can not be built in WA and chemical batteries have stopped falling in price.

    Nuclear might be the solution if it produces electricity for 5 US cents per kWh. Will batteries ever store electricity that cheaply? Why not do a storage auction to find out!

    Yet another disastrous consequence of mass immigration. If AUS had the same immigration rate as Holland from 1960 onward, a lot less coal and petrol would have been burnt in Australia.

    • Jacob
      “Pumped hydro cannot be built in WA” is not technically correct, pumped hydro does not need to be on a river it just requires circa > 50m head using sea water. There are locations that pumped hydro can be utilised due to topology of the land. Please don’t put forward unsubstantiated propaganda, there are a number of studies that have looked at potential PH sites around Australia, the Snowy is not the only location!

      • I actually said “probably can not”.

        This is worth a try:

        ripping out the boiler from an old coal plant and replacing it with a molten salt thermal storage tank that will be heated using excess renewable energy.

        described as a Carnot battery

        The cost of converting the coal plants is not expected to be overly significant because a large amount of the existing infrastructure would be reused and permits plus grid connections are already in place.

        https://www.greentechmedia.com/articles/read/germany-thermal-storage-into-coal-plants