Late Friday I reported on a possible victory for MB:
The review recognises that price is an important indicator in establishing whether the domestic market is functioning effectively and considers that the ACCC’s forward LNG netback price series is the most applicable prices when estimating the likelihood and extent of a potential shortfall. As such, the review recommends amending the ADGSM’s guidelines to include referencing the ACCC’s LNG netback price series in estimating a potential shortfall.
This amendment clarifies the relevance of the ACCC’s LNG netback price series to considerations under the ADGSM and strengthens the ADGSM’s ability to deliver on its objective of securing domestic gas supply.
Because gas prices are currently far above the ACCC figure, this sets up the opportunity for the SmoCo Government to trigger the mechanism and demand that the gas cartel drop prices to $4.50Gj from the current $11Gj:
Needless to say this would be picking a major fight with Big Oil but that’s an equally good prospect for the SmoCo Government.
Menzies Reseach Centre boffin, Nick Cater, describes why:
The news that two more coal plants are about to close in the US would have been unwelcome at the White House.
Despite the President’s “best endeavours”, the carbon footprint of the average American continues to shrink. More than 46,000MW of coal-fired generator capacity will have disappeared by the end of his term, the equivalent of almost twice the entire capacity of Australian coal plants.
It is hard to see what more Donald Trump could have done. He has neutered the Environmental Protection Agency, ripped apart his predecessor’s Clean Power Plan and given the finger to the Paris Agreement. Yet he has failed to revive the fortunes of coal, despite his solemn promise to miners in Virginia on the campaign trail in May 2016.
Trump should have known that you can’t fight the market. The fracking revolution means coal can no longer compete on price with gas, which emits half the CO2 and a 10th of the pollution.
The same thing might well have occurred in Australia, if state governments had not been spooked by fracking.
As usual, Cater prefers ideology to facts. There is no cheap fracking gas left in eastern Australia. Nothing under $8Gj. All the cheap reserves are owned by the gas cartel and earmarked for export. Which is why the Friday ADGSM decision is such an opportunity for the SmoCo Government.
Cater’s point about Trump is well made. Gas is the transitional fuel between coal and renewables. Indeed, it is the vital stepping stone as storage catches down in price, being the only truly “dispatchable” fossil fuel power, able to turn on and off in a jiffy. That is perfect for intermittent renewables.
Like everyone else, Australia planned for gas generation to fill the void left by coal as energy storage caught down in price, but unlike everywhere else we allowed the price of gas to rocket 1000%. Because it sets the marginal cost of wholesale power, our electricity bills went nuts too.
So, if the SmoCo Government were to suddenly crash the gas price with the ADGSM, picking a huge barny with Big Oil along the way, it would completely change the narrative around both energy and climate change for the nation and itself. It has alraady started at the The Unaustralian:
Mr Cottee, one of the founders of Queensland’s booming $70bn natural gas industry, said a domestic gas reservation on the east coast could devalue the price of gas, lessen state royalties, and reward states such as NSW and Victoria, which have locked up some gas resources.
“It seems perverse that the federal government is pursuing a policy that may have the effect of decreasing the wellhead value of gas extracted — upon which state royalties are based,” he said.
Mr Cottee said this could “lessen the royalties received by Queensland and South Australia for the purpose of enabling the Victorian and NSW governments to posture their “anti-gas” stands.
Mr Cottee, now chairman of State Gas and Elixir Energy, said the government should be pursuing an increase in supply instead of domestic gas reserves.
This is the lie SmoCo dshould expose. If he manned up to it and punched Big Oil in the face, he’d look fantastic taking on such immense carbon jockeys, especially for a PM being roasted alive by climate change.
And, as Labor runs off schmoozing coal in QLD under the Albotross, SmoCo would be able to argue that only he is able to deliver both lower emissions, as well as cheaper and more reliable energy as he becomes the lord of cheap Australian gas.
Not to mention the roughly $20bn in stimulus it would pour into every business and household on the east coast over time. That is the overlooked truth. It’s not just manufacturing that’s being gouged. It’s EVERYONE.
It’s such a political no-brainer that it says a lot about how corrupt the SmoCo Government is that it did not do it long ago. Enter Resources Minister Greg Canavan, also at The Unaustralian:
The Coalition is eyeing the Northern Territory’s giant Beetaloo Basin gas deposits as a prime target for a planned national reservation scheme, declaring Darwin the favoured destination for supplies over the energy-short east coast or lucrative Asian export markets.
“That’s the big prize and we need to make sure that gas is reserved in Darwin,” Resources Minister Matt Canavan told The Australian. “It has enormous potential as a manufacturing hub with a deep sea port close to Asian supply chains so Beetaloo can play a part there.
“One thing it misses is a cheap and readily available source of gas feedstock to make sure new industries in Darwin can thrive and compete on an international stage. Beetaloo will be critical to making that happen.”
These resources are cheap but they are owned by the cartel. Why is Canavan working with them to NOT bring them south for much grater economic benefit given the breadth of the gouge.
This does not bode well his enforcement of the new ADGSM.
