This is now reaching proportions of madness reserved for Banana Republics like Venezuela. The east coast Australian gas price is $35Gj, $4Gj higher than the same Aussie gas is being sold to China. The sheer lunacy of this has shaken even the trickle-down wankers at the AFR:
The first signs of the price surge feeding through to household power bills came on Tuesday as the Victorian regulator announced a 5 per cent average increase in standing offer power bills from July 1.
Increased standing offer prices are expected to be announced for other states by the Australian Energy Regulator on Thursday, reflecting the leap higher in wholesale costs in recent months.
Wholesale gas prices have doubled this month, coming on top of electricity forward prices that have risen up to five-fold in 12 months. The price surges have triggered fears of an energy price crisis similar to Europe’s and led to warnings that the new Labor government will fall short of targeted price reductions.
The AER decision was delayed in late March by then federal energy minister Angus Taylor until after the election, in which the cost of living and future energy prices became a heated topic of debate.
The escalation in gas prices on the east coast in May builds on April’s 46 per cent jump and is forcing manufacturers that rely on wholesale tariffs to the brink of closure, as well as squeezing retailers caught in between.
Prices for wholesale power in the 2022-23 financial year have surged almost five-fold in NSW over the past 12 months, and more than trebled in Victoria, Queensland and South Australia, according to energy adviser Energy Edge.
…That means Labor’s policy of increasing renewable power penetration to 82 per cent of total power generation by 2030 is unlikely to work on its own for prices to fall to $51 a megawatt-hour by 2025 and $45/MWh by 2030, according to JPMorgan energy analyst Mark Busuttil.
“In our view, wholesale prices are being driven by high fuel costs (not renewable power penetration) and therefore unless the ALP addresses east coast gas prices, electricity prices will remain elevated,” Mr Busuttil said.
Believe it or not, Australia’s east coast is currently paying the same price for gas as is Europe. The difference is that we produce it at $1Gj while Europe has none and relies upon a deadly enemy in Russia to supply it, which is obviously gouging mercilessly.
The east coast population of Australia has no such sovereign enemy. What it does have is a homegrown foe in the LNG gas export cartel which is viciously starving the economy of gas while it ships it all to China, driving the local price mad. That is Santos, Origin, BHP, Exxon and Shell.
This is all more ludicrous because we have the policy mechanism to fix it in the Australian Domestic Gas Reservation Mechanism (ADGSM). It can force as much gas as we like to stay at home. But nobody is triggering it. The Morrison Government was corrupted by the cartel. The Albanese Government may be as well. We don’t know yet. It doesn’t even have an energy minister. w
WA has just such a domestic reservation policy and is currently paying under $6Gj.
Recall that gas also sets the marginal cost of electricity and when you plug these prices in the result is mind-blowing:
At current gas prices, east coast wholesale electricity prices will rise 1000% from recent lows in the near future. That’ll mean 250% for end-users.
This is energy, the purist input price into EVERY SINGLE business and household in the economy.
The RBA is already freaking out about inflation and readying paralysing rate hikes in the wake of the RBNZ. Yet here we are handing ourselves a European-scale energy shock despite the fact that we produce massive excess gas that comes out of the ground virtually for free.
This is so far beyond the pale in every conceivable way that we should leapfrog the ADGSM, nationalise the blood-sucking gas cartel, and send its executives to prison for grand larceny.