The gas cartel wins

The new energy issues paper released by the Minister for the Gas Cartel, Keith Pitt, has produced a debate as devoid of ideas and facts as the paper itself. As usual, it is all rentier and no Australia at the AFR:

A new Morrison government discussion paper on gas reservation has flagged a sensible backflip on further meddling in the east coast gas industry. Domestic manufacturers have blamed Queensland’s massive LNG export expansion for diverting gas offshore and driving up the price for local buyers.

Under Malcolm Turnbull and Scott Morrison, a supposedly free-enterprise government has launched banana republic-style threats, including export controls, against an industry that previously enjoyed bipartisan praise for making Australia the world’s biggest LNG exporter and helping to power the rise of Asia’s middle class.

What an extraordinary statement. There is no east coast free-enterprise in gas. The market collapsed after the export cartel dominated all reserves and lifted local prices from $3Gj to $20Gj while its export prices collapsed from $20Gj to $3Gj. This is the cartel business model. To lose money on exports but recoup it at home.

It is such a basic economic case for public intervention in a failed market that it could be taught at the kindergarten level. When we did intervene, the price fell to $10Gj but collapsed export prices kept falling. In other words, we were only paying the $20Gj because of the monopoly power of the gas export cartel.

Yet the AFR describes the intervention not the cartel as typical of a Banana Republic. This is a viewpoint so ideologically or literally corrupt that no truth can or will penetrate it. There is no point in arguing against it. It is a closed-loop of propaganda.

And that’s all that there is. There is no broader debate at the ABC, none at the metro dailies, the anti-Murdoch independent press never mentions gas. TV pfft. Labor is silent, too terrified of another mining coup. It is Bruce Robertson and me versus a giant edifice of lying fossil-fuel scumbags protected on every front by government and media. Both of us get the occasional hearing but the broader truth is that we are mostly ostracised for telling the painful truth.

The end result is that instead of breaking the largest single economic blockage to Australian recovery, a protected gas cartel has been entrenched by a Gas Unplan bizarrely written by a supposed manufacturing champion, and now, Gas Unreservation that guarantees the cartel will be unmolested as it gouges.

So, I give up. The gas cartel wins. Australians will be paying the world’s highest prices for gas and electricity for as far as the eye can see. Hollowing out of manufacturing will continue even as we decouple from China, leaving us hilariously helpless as regional security deteriorates.

That’s what the Australian political economy has chosen so my best advice now is to get off the grid as soon as you can. Go solar and wait for a household battery in the next few years then bid the broken grid farewell. For manufacturers, I’d recommend moving to WA or offshoring to somewhere in Asia where Aussie gas is cheap.

I might have also recommended getting your hands on a semi-automatic rifle but, the truth is, when China comes for you there’ll be nobody left to fight alongside. There will be no industry left with which to defend ourselves as China invades with weaponry built lock, stock and barrel by our own, exported cheap energy. Therefore, a much more viable insurance policy for your family against the collapse of Australia is getting dual citizenship with the US, UK or Europe, as soon as possible.

It’s very simple to fix Australia’s world-beating energy mess with blanket domestic reservation but that is entirely beside the point. There is no person, no values, no intellect, no nation left to do it.

David Llewellyn-Smith
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  1. Stewie GriffinMEMBER

    There is no person, no values, no intellect, no nation left to do it.

    EZFKA is what we are now.

    • Display NameMEMBER

      When multi nationals have purchased your politicians, the multi nationals have zero sovereign concerns, its all their share price and their profit.

      • Stewie GriffinMEMBER

        There is no Australia anymore, just an Economic Zone populated by consumers who are no more important or special than any other consumer in any other part of the world, straight from the AFR this time…

        ….including export controls, against an industry that previously enjoyed bipartisan praise for making Australia the world’s biggest LNG exporter and helping to power the rise of Asia’s middle class.

        Wanna know why the media don’t run with Australians need cheap gas?

        To them ensuring that Asia’s middle class can access Australia’s gas is just as important as ensuring Australians can access their own gas – this is a culturally and socially neutral policy. Ensuring EQUITY in terms of accessing the gas is far more important than ensuring Australians have access to cheaper gas.

        When you turn yourself into a MultiCult economic zone you cease being anything, and any attempt to differentiate yourself from other nations and use whatever natural advantage or resources endowment you might have for your own benefit is rac!st. To actually get “Australians” to rally for their own self interest is NATIONALISTIC and everyone in the media has been trained to know that anything to do with nationalism is inherently rac!st and evil.

        The only culturally and socially ‘neutral’ means of solving the economic problem, ie wants vs resources, free of any underlying social biases that may favour one population group (Australians) over others (East Asians) is to allow the market to solve it, that AFR knows that we live in EZFKA.

  2. Ronin8317MEMBER

    Time to learn Mandarin and the proper way to kowtow to the Chinese Emperor. 三跪九叩

    First you kneel down, then bend forward and bang your head onto the ground as hard as possible. It must make a sound on impact to show your devotion, or the Emperor will cut your head off. Repeat this banging head on the ground three time, rise up, and repeat the whole sequence three times. Once you get good at it, you can ‘fake’ the sound of forehead impacting the ground with your hand instead.

    Anyone want to join Gunna’s bullshit party? It may be the only way to get some sensible policy on the issue.

  3. GunnamattaMEMBER

    Gas reservation issues paper

    1. How would a prospective national gas reservation scheme address a potential domestic gas shortfall and impact gas markets in the medium or the longer term?

    2. How would a prospective national reservation scheme affect investments in oil and gas projects?

    3. What would be the impact of a prospective national reservation scheme on Australia’s LNG trade?

    4. What would be the quantifiable benefits of a prospective national reservation scheme for domestic gas users and for power generation?

    5. Are there gas reservation models that have worked in other jurisdictions which could work at the national level in Australia or are there examples of unsuccessful policies Australia can learn from?

    6. How would a prospective national gas reservation scheme interact with state and territory policies and regulations?

    Some submissions on these Qs would be an idea….

    • Ronin8317MEMBER

      Here is an idea :

      * Gas companies pay their royalty to the State in future contracts
      * The RBA buys the future contracts from the States, in return for cash.
      * The future contracts is incorporated into a ETF, and sold to investors.
      * The contracts themselves are used to provide gas to local manufacturers and energy companies at spot price – $3. – government subsidy.

      As the RBA can print money, everyone ends up being better off.

    • With respect mate there are no good answers.
      The cartel needs to know who is boss and that’s a matter of nads not knowledge or plan or strategy or or or
      All comes down to a simple question, have you got the nads?
      oh and a similar somewhat related question :
      At what bribe do you simply say, fair enough boys …have some fun?

  4. Wind, Solar and Batteries will crush the value in gas medium term. The higher they go the faster everyone else invests in other stuff. Even with the gouging they cannot make money. It would be funny if it wasn’t so true.

    In summary – environmental vandals, corrupt and really bad at business. They will be gone in 10 years as innovators destroy their entire reason for being.

  5. GunnamattaMEMBER

    When it comes to Australia’s political economy in 2020 and beyond the basic equation is this.

    1.  Do we want an economy (and society) which is economically self-sustaining through being competitive at doing something with the rest of the world? – If Yes, go to below questions.  If No, drop strides, bend over, and await rainbow

    2.  Does what we are currently doing on an economic basis (in late 2020 it appears this is solely exporting iron ore) provide a realistic scope for enabling ongoing improvements in the quality of life of Australians into the foreseeable future?   – If Yes, kick back and relax.  If No, go to next question

    3.  Does Australia have alternative means of underpinning ongoing improvements in the quality of life of Australians into the foreseeable future?   – If Yes, commence operation at point where status quo starts to deteriorate.  If No, start to examine and develop alternative economic quality of life drivers for Australians.

    It is only at the point where we come to ‘No’ as an answer to Q3 that we start to ask ourselves ‘what could/should/would we do to support our quality of life aspirations looking into the future?’  

    At that point we could identify that Australia has

    A.        About the world’s most expensive people, – a disincentive for offshore deployment of capital using Australian labour to satisfy production or servicing needs – courtesy of an overpriced AUD which has been made overpriced by Australia’s banks offshore borrowings to support mortgage lending in Australia, meaning that the most likely means of reducing the AUD is a housing crash, meaning the cure may be nearly as bad as the condition.

    B.      About the world’s most expensive real estate, – a disincentive for offshore deployment of capital using Australian real estate from which to satisfy production or servicing needs – courtesy of Australia’s banks offshore borrowings to support mortgage lending in Australia, and the substantial reliance of Australian states on real estate transfer duties, and the RBA having spent a decade or more inflating house prices to encourage ‘wealth effect’ spending by Australians to support GDP.

    C.        About the world’s most expensive electricity, – – a disincentive for offshore deployment of capital using Australian energy from which to satisfy production or servicing needs – courtesy of Australian gas being siphoned off to create loss leading ‘exports’ and associated losses which become tax deductable, and minimise taxation for companies involved in the siphoning.

    Now while all three would be addressed in our best of all possible worlds, in our existing world we have an effective Governments and RBA V Gas export Lobby match in play.  And given that the Government is at least plausibly responsive to the electorate (which pays energy bills) then surely at some point it is possible that a politician may propose doing something about ‘C’.  

  6. TailorTrashMEMBER

    When my children were little I got them dual nationality
    …when people asked me why I told them I thought that the Australia they were born into would not exist at some point in their lives . Now I read this and watch as the clock ticks ….

  7. Permission to send this to one Senator Rex Patrick on your behalf ?? How about everyone who reads the above posts it below Scotty-From-Marketing’s next social media spruik…

    but yes, rifles and bullets might be a superior alternative