Morrison’s gas cartel pillages billions

It still gets the least amount of press of any of the Morrison Government’s disgraces thanks to comprehensive MSM stupidity. But pound-for-pound, there is no more horrendous pillaging of Australia than that conducted by the Morrison Government’s protected gas cartel.

Over the Christmas break, there were significant developments in the global energy crisis that illustrate just how much money the cartel is now stealing directly from Australian’s pockets.

The global gas price jackknifed higher in the past month in both spot markets and, more significantly, futures markets. Prices that would just one year ago been thought of as preposterous are now the norm out to mid-2023 and it is not until 2024 that this price windfall reverts to mean:

The driver of this price windfall is the gas crisis in Europe over the Nord Stream 2 pipeline which has now been overplayed by Russia. By starving Europe of gas until it approves the pipeline, which will not now happen until H2′ 22, Russia has given Europe every incentive to diversify elsewhere.

That other supplier will be the US where LNG export plants are booming and will continue to do so. Asian gas futures markets are now pricing a longer timeframe for price mean reversion to get this done.

In the meantime, Australia is enjoying a huge gas price windfall with equally large budget revenue flows to match. Or, rather, it should be, but isn’t because the gas cartel pays no tax thanks to the fantastic rorting embedded in the Petroleum Resource Rent Tax.

To give you an idea of just over the top this rorting is, consider the following table of breakeven prices for Aussie gas:

Remember that these are all-in costs and a lot of the capital that make up these breakevens is already written off. The cash costs are now fabulously low, well below $5Gj for most if not all. They are selling it in Asia for $34.

The gas cartel paid no tax in 2019/20. None from Origin, Santos, Shell nor Chevron. The PRRT shows no boost from windfall profits ahead:

We are talking tens of billions of foregone tax revenue here.

What we are getting instead is this. Local gas price rises:

Even as we get NOTHING from the export price windfall of our own gas, the local price of gas is once again through the roof, hollowing out manufacturing and delivering households higher utility bills.

Moreover, the majority of Aussie gas goes to China, where it is used to build weapons to end Australian freedom. And the whole box and dice lifts the Australian dollar making the hollowing out that much worse.

This is not the sensible export of the national endowment of energy resources. It is the pillaging of Australian gas by a vicious cartel that would sell its own mother to the Nazis for a few dollars more.

So, what has your Morrison Government done about it?

  • When Senator Rex Patrick made a gas reservation policy a condition of signing up to $30bn in tax cuts, Morrison lied to him, took the tax cuts then never delivered the policy.
  • After the Turnbull Government established a review of the PRRT, the Morrison Government buried it.
  • When skyrocketing local gas prices destabilised Australian decarbonisation, Morrison blamed renewables and rewarded the gas cartel with new tenements to despoil, plus built it a government-funded, white elephant gas turbine.

In short, the Morrison Government has protected the gas cartel daylight robbery at every turn.

This is treason so vast that the gallows are the only sensible response.

Houses and Holes
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Comments

  1. happy valleyMEMBER

    “This is treason so vast that the gallows are the only sensible response.”

    Bring it on and pass the popcorn.

    • Im surprised no-one has taken a pot shot at a few of them.
      Hopefully ICAC and the cross bench can eliminate them.

      • There’s a very good chance of that unfortunately, much more so than the gallows being wheeled out. But it would be “interesting” only in the chinese curse “may you live in interesting times” sense of the word.

      • TailorTrashMEMBER

        Would like to see him win in a minority government
        ( few independents get up ) that might last for two months . Just enough time to dispatch Albo and then get
        Shorten back in and he crashes through this reforms ( grannies not included) . Couldn’t be worse than this lot

        • kierans777MEMBER

          That would be fascinating to watch. However given most independents so far have been gutless and unwilling to hold the LNP’s feet to the fire I’m not sure this would pan out. Rex Patrick was a fool for trusting Morrison and he apologise for his stupidity and naive behaviour.

          Independents have to burn the government down. After a few crises, the majors will get the point.

  2. Goldstandard1MEMBER

    I got a notice from my gas provider yesterday and if I’m not mistaken it’s a 15% rise.
    I’m out so changed prividers but that is just a cushion. Looked at the numbers and yep, all gov approved. No wonder we can’t make anything here anymore.

  3. In less corrupt countries, like say Indonesia, they’re not afraid to implement reserve policies that protect local industry from high local energy prices arising from energy exports.
    But as I said this only happens in less corrupt countries…
    https://www.abc.net.au/news/rural/2022-01-05/indonesia-suspends-thermal-coal-exports/100739106
    Meanwhile in banana republics like sub Saharan Africa and (oh yeah) Australia we f#ck our manufactures so hard that those foolish enough to try add-value to natural resources will bleed-out in less than a year, it’s a messy business but lets face it it’s necessary.

    • Are you saying putting in gas reserve policies is a “messy business”? If so one look at WA gas prices would corroborate that as I believe we have gas reserve policy over here.

      • I think I might have been suggesting that watching Aussie manufactures bleed -out was messy business that had to happen for the good of the Gas export cartel
        It is trivial to implement gas reservation policy, we know the peak price of NG on the east coast for the 10 years preceding establishment of the Export terminals. logically this could be set as the maximum price whereby gas exporters are expected to make up the “market price” difference if they’re operations (or agreements) result in higher prices.
        It’s trivial and that’s why it won’t happen, far better to let Aussie manufactures (with 20 years to 50 years in Australia ) get priced out. In general Aussie hate manufacturing (it’s dirty and pollutes) so they’d rather it happens elsewhere…the rest is just policy

  4. I'll have anotherMEMBER

    Would be a good one for 4 corners or similar. Need some tier 1 current affairs journalism on the value (or lack thereof) we get out of our energy sector.

    • Ian Verrender has spelled it out in laymen terms on numerous occasions on ABC TV and News website.

      what more can journalism do. The population are too busy watching reality TV to know where their electricity comes from let alone understand the economics of not reserving a quota of our natural resources for the domestic market. its wide-spread basic economic illiteracy.

    • Except when the first question the ABC asks is the company’s policy on abortion leave for men in dresses, it tends to lose gravitas on how serious the entire subject matter is.

      Again, it all relates to the viability of the opposiotn.

      WHen the public perceives the opposition worse than the government, the government can get away with a lot.

  5. So is Federal Labor offering any alternative that would give anything back to Australians? Last time I checked, they were in cahoots with APPEA instead.

    • So far, yes. Though last election they offered hope. I suspect they might address this eventually but perhaps not until second term.

      At least it’s a chance. With Scunto the rape is GUARATEED.

    • So is Federal Labor offering any alternative that would give anything back to Australians?

      A quota of seats at the board for womynz, homosexuals and people who can’t speak English… the important issues.

      Everything else to stay consistent.

  6. Yes, the LNP will be very well funded this coming election (especially their independent stalking horses & supporting parties)

    • TheLambKingMEMBER

      Yes, the LNP will be very well funded this coming election (especially their independent stalking horses & supporting parties)

      This.

      Plus, the Murdoch led MSM will provide cover. AND the attacks on the ABC ensure they don’t go hard either.

  7. We have the most corrupt federal government on the planet.
    so corrupt. so evil. so greedy. so owned by ‘donor’s buying favours and influence.

    @ScoMo

  8. Is Putin smart enough to have thought he’ll use gas to pressure Europe, cause instability & at the same time his frenemy China by raising energy prices so high it makes many companies unprofitable & raises domestic tensions as Chinese people can’t afford the expensive gas as many houses in China were forced to install to stop pollution from coal heating? Plus close stresses in US, Australia & world markets etc now that he has loads of gold and is now dedollarised. Now if a Kazakh takes out one of the other gas pipes to the EU or the Siberian one to China …🤔

    • Should have said, so he can send in more troops to ex USSR republics, he restores USSR & crimps threats from EU, China & US

      • Zulu, NordStream 2 was ready to supply gas through the first pipe in early December. Second pipe was full and ready to supply end of December. The only reason these two strings are not in service is because German bEUROcrats keep delaying certification of the pipeline. Russia is not withholding gas from European markets, it operates within the existing legal framework.

        • That is exactly right. Russia is supply all their LT contracts, but the EU don’t want to sign anymore, there have been 30 shipments a week diverted from the US that were originally going to Asia. Asian prices have jumped, but the arbitrage is still enormous. The EU are playing a very dangerous game.

          Thats the danger of believing the above – that cost curve looks bonkers, no one develops a project for a 12% IIR (what date was that published???), and comparing existing projects with new ones on that basis with 20 to 30 year life spans ridiculous. Have a look at the P&L of the companies involved to see how profitable they are. For most Australian producers their price is linked to the oil price, so none of them are benefiting from the LNG boom! Conveniently ignored above…

          What MB doesn’t say he that he got this whole story wrong several months. That gas prices, oil and coal was merely a big speculative bubble. Blind Eddie could see it was structural… this is about to explode.