This is what happens when a corrupt government sponsors a gas cartel to capture your energy reserves:
A fourfold increase in gas prices has inflicted huge losses on a Riverina-based manufacturer in NSW and may force the company to temporarily close its doors within months if there is no relief.
Causmag International, which uses gas to make magnesium products, has already wound back operations over the past 12 months, cutting workers at two sites near Young from 38 to 29.
The company is one of many east coast manufacturers considering shutting down their plants as prices for natural gas surge due to coal power unit outages. These are sharpening the threat of the sort of broad crunch in energy that has hit economies overseas.
Wholesale gas prices in Victoria have tripled or quadrupled from typical levels to more than $30 a gigajoule, while prices in Sydney are north of $26/GJ even before colder winter weather drives up demand to peak levels.
…Causmag’s predicament comes as big industrial consumers are facing a “doubling or tripling” of electricity prices if they come off contract in the next few months, Energy Users Association of Australia chief executive Andrew Richards said.
…Prices are also being drawn higher by strong international prices for LNG, which soared last September and again after the Russian invasion of Ukraine in February. They have remained much higher than normal as energy importers seek to avoid Russian supplies.
…Gas buyers are partly blaming Queensland’s LNG exporters for the higher east coast domestic prices as they seek to capture more of the super-high overseas prices for gas.
“Netback” prices for LNG exported from Queensland, which signal the equivalent domestic price that exporters are receiving, are at $38.09/GJ for this month, according to the national competition watchdog.
That is higher than the spot prices in the four eastern states of between $26/GJ and $36/GJ. That signals that the three LNG exporters in Gladstone are still making more money from exporting gas than they would from selling it on the east coast spot market.
But analysis by consultancy EnergyQuest says the rise in domestic prices did not appear to be because of any increase in LNG export volumes. EnergyQuest linked the rise in gas prices more to greater call on gas for power generation because of the coal power outages.
This is a joke. In terms of Australian consumption volumes, the gas is basically unlimited. We’re only short because the exporters have left us that way. The local price is rising to parity with the global prices exporters have exposed us to.
IT HAS NOTHING WHATSOEVER TO DO WITH COAL.
The Morrison Government has failed utterly to bring discipline to the gas export cartel via the Australian Domestic Gas Security Mechanism. It was supposed to strengthen it in 2019 after doing a deal with Senator Rex Patrick in exchange for $158bn in tax cuts. It outright lied and was captured by gas cartel bribes instead, which led to the perverse “gas-led” recovery.
The ADGSM must be triggered and the gas export cartel forced to supply locals at prices far below export net-back. It is the only solution, as has been amply demonstrated by WA for decades.
Morrison’s catastrophe is only complete when one understands that three-quarters of east coast gas is being shipped to China to strengthen its industry (including military). Yet, as Morrison makes an enemy of it, we are gutting the last of our industrial base to guarantee that we have no way to defend ourselves.
The cartel pays no tax, employs few, and spends a lot of money bribing the government. The final insult is that gas sets the marginal cost of electricity so everybody is about to be hammered on that bill, not to mention extra rate hikes.
This is a case of Dutch disease so virulent that it will kill the host.