Labor ignores gas cartel plundering

He may end up as energy minister so here’s Chris Bowen on the energy shock rising across the east coast:

Labor frontbencher Chris Bowen says the release of the Australian Energy Regulator’s final default market offer for the next financial year represents bad news for households.

While there are international factors at play, Bowen blames higher prices on what he describes as nine years of policy failure under the former Coalition government.

“The fact of the matter is higher energy prices are bad news. The fact of the matter is higher energy prices are very much the Liberal legacy,” he said.

“Nine years of delay and denial comes at a cost, and this cost is being paid by Australians. Tragically today, this cost will be borne by Australian households.”

The default market offer acts as a safety net for electricity customers who haven’t shopped around for a better deal. Bowen encouraged people to look at other offers to save money.

He said Labor would drive an increase in investment in renewables as well as transmission to better equip the electricity grid to cope with a rising proportion of renewable energy.

“The fact of the matter is the lack of energy policy, the lack of investment in new energy, the lack of investment in renewable energy, and the lack of transmission over the last nine years means that Australians are paying more for electricity than they should be.”

Errr…sure…but what about the primary driver, mate? The gas cartel gouge has Australia paying $35 for its own $1Gj gas:

This is the same price that Europe is paying for Russian gas with whom it is at war. The same Aussie gas is cheaper in China at $31Gj.

And gas sets the marginal cost of electricity.

This outright theft of Australian income by a vehemently anti-competitive gas export cartel can be stopped with the stroke of a pen by triggering the Australian Domestic Gas Security Mechanism (ADGSM).

How can the likely incoming energy minister possibly fail to observe any of this?

Houses and Holes
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Comments

  1. Been a decade in the making. To your credit, you did raise plenty of noise. It fell on deaf ears. Serves us right.

  2. Anthony RogersMEMBER

    Lots of NIMBYism caused this as well.
    – Victorian Nationals banned gas exploration in Victoria in 2012 and Dan extended the ban until 2020.
    – Narrabri gas project in NSW has been opposed since inception in 2008.
    – AEMO ESOO has forecast Victoria to have a shortfall of gas in 2024 since at least 2018 and nothing has been done about it

    • We are already the biggest or 2nd biggest exporter in the world on gas. What’s a few more mines going to do as an overall percentage of that pie? Especially if it just gets shipped overseas anyway. Locals holding the bag on all the negatives however. I do understand the postion – locals lose, doesn’t materialise change much on the world market to affect local prices.

      A gas reservation does a LOT more than opening up more gas. All that does is cause a gas glut, and leaving us with less strategic assets in the future. Even OPEC and oil cartels know its better to drip feed your stock slowly to maximise your intergenerational gain out of an asset. A high price is good for Australia; if we aren’t the ones paying for it. Otherwise we are just selling our gas for cheap, mining it as fast as we can.

      • Anthony RogersMEMBER

        The east coast of Australia is really two gas markets linked by a very small pipe. There is QLD and there is everything else (NSW, VIC, SA). The “little pipe” is called the “South West Queensland Pipeline (SWQP)” and it has a capacity of 400TJ/day which is nothing compared to the ~3500TJ per day LNG exports. The little pipe is only flowing 67TJ today (https://aemo.com.au/energy-systems/gas/gas-bulletin-board-gbb/data-gbb/interactive-map-gbb) and so is having f’all effect on the NSW and VIC gas markets. Increase gas production in NSW/VIC and these prices differences go away fast

    • Completely wrong. Gas prices are not a function of insufficient supply in Australia. It is ALL about excess demand from the gross over-capacity of the 3x LNG trains in QLD.

      The east coast gas market only ever had capacity to 1x LNG train. All the expert reports show this. When the gas industry got greedy they built 3x LNG trans and made a bet they could extract our gas and trample our sovereignty (including over water) for some glass beads.

    • Ronin8317MEMBER

      More supply won’t decrease prices because every single joule is exported overseas. We need gas reservation first.

    • rob barrattMEMBER

      Don’t be ridiculous my dears. Here in Upper Toorak we’ve always been opposed to anything that smells like manual labor as opposed to our love for our dear Labor and Greens. I mean, Good Lord, imagine if we had an LNG project near here – OH the smell.. Yuck! I mean, I don’t even look at my gas bills – or any others for that matter, that’s the servant’s job.
      Of course, we’ve been totally misunderstood. We’re enormously keen on more immigrants – our rental properties are a valuable resource. And, needless to add, none of them would be able to afford to live too close to here (Good Lord – think of the effect on smashed avocado prices).
      No, it’s the gen Teal approach for us.

    • As you know, Victoria has the greatest national potential to wean itself off gas for household heating. My home is one of them. Bring it on.

      btw, is Gina still smarting from her judicial spanking? I’ll leave that thought with you while you ponder the worth of subscription to this blog.

  3. MB readerMEMBER

    David, have you recently prepared a summary of the ADGSM? Such a summary would be useful for our writing to our new MPs demanding the reservation be triggered.

    • THIS. A landing page on the site (no, not a link to hundreds of articles) and accompanying PDF we can send to local MPs

      • MB readerMEMBER

        Swampy, was there supposed to have been a link attached to “THIS”? If so it didn’t work.

      • Absolute BeachMEMBER

        YEP> please action as per Swampy’s note. Simple link to the numbers so we can c&p to local Members. Now is the time.

    • Pre-election, I went to a drinks with Zali and a number of her staff. I raised Gas Reservation as pretty much the no 1 issue that could be dealt with on day 1 – her staff literally had no idea what I was talking about (although they probably weren’t the A team). I then offered to work as her economics adviser for free and at that stage I think they thought about calling the police on me for stalking.

      • +1
        Reusa indicated the lack of awareness in his social circle a while ago.
        Can confirm from my experience, too.

    • Just on this – every teal candidate (and probably every Independent) has ” fixing cost of living” as one of their policies on their website.

      A simple “do this and electricity prices will fall” explanation would help – probably CC’ing Rex Patrick who gets it.

      • Swampy has spoken.

        Do it. Do it.

        Some nice collects on your tips, thanks! I didn’t win as much as you did on the Dees so a beer in Syd will suffice, kthx.

  4. “Minister, why don’t you activate the existing, legislated reservation policy? I’m glad you bought the issue of gas supply up, the fact is, the other guy failed to build solar panels and the sky is blue and that is why we need diverse candidates in those seats and I am committed to diversity….. and solar panels”

    lmfao!

  5. How can the new Energy Minister fail to see this? Maybe he’s been bought and sold a few times by exactly the same donors as the old Energy Minister. The new Government is the old Government, but with much better manners. Great to see Albanese force an apology to Dutton out of Plibersek.

  6. gballardMEMBER

    Don’t expect much from the teals, they are collectively as dumb as the proverbial d..sh.t. Not sure whether the greens are any better!

    • Ronin8317MEMBER

      Don’t confuse ‘dumb’ with ‘not caring’. Spender, the new MP for Wentworth, had a perfect TER. She comes from the ‘Liberal aristocracy’, and believes the solution to high electricity price is a 50k setup of solar panels + Tesla Powerwall.

    • Well one is a neurosurgeon, another is a GP with three Masters degrees, another got a perfect TER.

      And that’s before we get to the barrister or the ABC foreign correspondent or Boston Consulting Group Principal.

      So, I can see your point.

  7. Chayan GunendranMEMBER

    Does anyone know by what percentage would the average electricity Wholesale price drop in the NEM if ADGSM is triggered? Am thinking of some simple metric to share with mates who have no knowledge of the energy/electricity market – back of the envelope would do, thanks.

  8. Any new CEO’s job is to spend the 1st 6 months of the job finding all the problems your predecessor left for you.

    Why would politics be any different.

    It would be a political disaster for Bowen to solve a massive problem using a LNP lever like ADGSM.

    • Yes, better politically to let price skyrocket while they can still blame Taylor and then fix it.

  9. It’s often claimed that wind and solar PV are cheaper than coal and gas. In light of that, why is it a policy failure of the previous government that more of that capacity hasn’t been built? Something doesn’t add up…