Centre Alliance gas reservation coming?

Via The Australian:

Centre Alliance has signalled it could support the Morrison government’s full personal income tax cuts package as soon as Friday without a deal on gas being locked in, as Labor also leaves open the possibility of backing the flagship $158 billion tax plan in full.

Stirling Griff, who with Centre Alliance colleague Rex Patrick holds two crucial Senate seats, told The Australian the minor party was “confident of a positive outcome” on gas and expected negotiations with the government to be finalised “in the coming days”.

…“We appreciate the economy needs a stimulus and we’re supportive of the tax cuts that will bring about that immediately. We may well support the whole package,” Senator Griff said.

Asked if a new government gas policy, which could include a modification of the Australian Domestic Gas Security Mechanism or an east coast gas reserve, had to be completed before Centre Alliance voted for the tax cuts, Senator Griff said: “Not necessarily. It’s all about intent and a plan. It’s unlikely for a lot of things to be resolved in a short space of time, but as long as it’s going in the direction it needs to go that will give a positive outcome; that works for us.”

Senator Patrick added the party wanted a “clear understanding” of the government’s intention on gas, and the details in writing, before supporting the tax cuts.

Given ScoMo would sell his mother for two bob, that doesn’t sound like a great idea to me. Still, the Government will have to keep working with CA so it can’t just lie and trash the friendship.

ScoMo should be immensely grateful to CA. If reservation is done right, and shifts the gas price to where it should be below $5Gj permanently (as opposed to above $11Gj today), then it will provide an east coast stimulus in the realms of $15-20bn, double or triple the tax cut.

As well, there is every chance that export net bank prices will remain low for the foreseeable future. Via Reuters:

Economic headwinds are limiting the appetite for liquefied natural gas (LNG) in Northeast Asia, home to the world’s biggest importers of the fuel, even as global supply is expected to rise by 14% this year.

The growth in monthly import volumes of LNG into Northeast Asia during the first half of 2019 will decline for the first time since 2015, according to Reuters calculations based on Refinitiv shiptracking data. The region includes Japan, China, South Korea, which are the world’s three largest LNG importers, and Taiwan.

Further underscoring the weaker demand, LNG imports into the region in June are set to fall from May, for the first time ever, according to Refinitiv data going back to 2013. Imports typically rise in June as gas demand increases to generate power for air conditioners during the Northern Hemisphere summer.

This slowdown is occurring as additional volumes from Russia, the United States and Australia are expected to swell overall LNG supplies to 365 million tonnes by the end of the year, from about 320 million tonnes currently, according to consultancy Wood Mackenzie.

The main driver of the slowdown is China, whose LNG imports for June look set to drop by 9% from May as the country’s coal-to-gas switching has moderated amid weaker economic growth.

In South Korea, the start up of three new nuclear power plants are expected further curb LNG imports.

Sure, there’ll be no more energy crisis for the LNP to exploit but if the last few years have proven anything it is that punters have NO IDEA how energy markets work anyway. Over a decade, the polity has been convinced that:

  • the carbon price caused bill spikes when it was government over-investment in networks;
  • it was in households interests to vote against a carbon price, that made firms pay for mitigation, in favour of a policy that made them pay for it;
  • renewables caused bill spikes when it was all gas prices arising from the LNG export cartel.

If the punters knew the truth they would long ago have burned down Canberra, closely followed by Curtis Island. They can be sold anything.

In short, the Government will benefit more from falling utility prices than it will from its ongoing carbon culture war. Even though it was its own inaction that caused the price spikes in the first place!

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