Albo’s cowards black out Australia to protect mining

By in Australian Economy, Australian LNG

| 84 comments

For nearly a decade now I have had the misfortune of having to tell and retell the sick tale of the eastern energy markets.

I have done so on this blog, and very occasionally received a nibble from the MSM.

I have done so at dinner parties and watched the slow drop of collective jaws around the table.

I have done so with policymakers, a few of whom have tried to fix it only to be pick-axed by mining.

And here we are ten years on with the proof baked into the pudding as the eastern gas and electricity markets collapse into a huge government-run rort, and still, the truth makes no difference as another government succumbs to the shroud of mining power.

Here is where we are today:

  • The eastern gas market is suspended by the regulator and prices are capped at $40Gj versus $4Gj traditionally.
  • The National Electricity Market has been suspended by the same regulator who is now running it as a ward of the state, based upon capped prices and compensation payments from $300-500MWh versus $25MWh traditionally.

Multiple factors are being cited as causing this: cold weather; broken turbines; policy chaos; lack of network investment, so on and so forth. This is ALL IRRELEVANT.

There is only one cause and one cause only: mining greed and power.

Gas and coal extractors are charging Australian consumers astronomical prices for the energy dirt that they dig up a few miles away almost for free.

That’s it. That’s all that there is. Everything else is secondary or so far down the list of causes that it can be fixed in 2050:

  • gas prices have gutted industry for years and, post-Ukraine war, are now war-profiteering at a 1000% mark-up;
  • gas and coal prices set the cost of electricity in the NEM and hence power costs are up 1000% as well.

Everything else flows from this:

  • AEMO has suspended the gas market to stop prices from going to $800Gj.
  • AEMO has capped electricity prices at $300Gj, which means power producers are losing money at these fuel prices.
  • So, they are opting to pretend that their turbines are broken instead. Hence we see blackouts all over.
  • AEMO is now forcing them to produce and paying enormous compensation for doing so.

There is plenty of latent capacity in the NEM. The transition to renewables is fine and can accelerate with no problem at all. There is plenty of fuel!

The problem is the gas and coal cartels which are charging Australians war-profiteering prices for our abundant fuels by exporting it all and leaving us short of supply at home.

So, when Energy Minister Chris Bowen gets up and says the following then he should be pelted with rotten fruit:

“AEMO taking this action will help the NEM alleviate the unplanned withdrawal of generators from the wholesale market,” he said.

“This is the best way to make sure the lights stay on and AEMO has the Government’s full support in taking this action.

“This situation once again highlights the importance and urgency of new investment in renewables, storage and the transmission that is needed to ensure affordable and reliable energy supply.”

No, it doesn’t. That is a separate answer to the question of decarbonisation. It will not help the rolling energy crisis we have had since 2014. As more coal and gas are displaced by renewables then more of it will be exported and our energy prices will not come down.

Meanwhile, Mining Minister Mad King appeared at the AFR to kowtow to the war profiteers:

“I think there’s a distinct lack of understanding sometimes in parts of the community – not all of it – of when they turn on the power switch, what’s behind it,” Ms King said, and coal was the “reality” right now.

However, she quickly reiterated that advancing Labor’s target of net-zero emissions by 2050 was absolutely “front of mind” in taking on the role.

“But we literally cannot get there overnight, and we do have to have a plan in place, and that’s what’s been lacking,” she said, adding that the Greens push for net-zero emissions by 2035 would be nice, but was not realistic.

“We will have it on a sensible pathway that maintains our economy.”

Ms King on Tuesday backed states freeing-up gas reserves for exploration and production to ensure households and manufacturers can access reliable energy for years to come.

Bovver Bowen and Mad King can’t possibly be so stupid as to believe this dung, even though it is shoveled all over them by the mining cartel lobbies. If not, then that only leaves the possibility that both are corrupt.

It is not necessarily the case that they are personally on the take from mining, even if Labor most certainly is. It is more that the ALP is intellectually captured by a decade of opposition derived from its last attempt to rein mining power with taxes.

And so, this new Albanese Government is protecting mining war-profiteering at the expense of the most basic economic function we have: reliable energy.

Thus, the answer is as simple as the underlying problem. One way or another, the energy export cartels must be forced to sell their fuel to Australia cheaply.

That can be done with domestic reservation, or with export levies, or super-profits taxes. But that is the ONLY answer to the crisis.

Mining spent $22m getting rid of Kevin Rudd and his RSPT in 2010 and here we are a decade later and it is delivering scores of billions in war-profiteering returns directly from your pocket.

What an ROI!

Houses and Holes
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Comments

  1. Ronin8317MEMBER

    If North Korea fires a long range missile and destroy the Gladstone LNG plant, it’ll be.. the best thing to happen to Australia ever? Has Australia gone insane?

    • skippy

      Reminds me of the delta being made off the Russian FF sold to India, anyway I not only saw, but understood what was going on in the FF industry with CapEx going into all these production facilities which in a way resembles what Swift did in the Beef market.

      It was the end of the Australian owned and operated engineering capacity to not only build on this scale, but then enjoy the long term benefits in jobs, cost/price and national economic benefit from extracting national resources in the near and long term. Heck most of this stuff is built in India and now Eastern Europe [full of fraud and corruption] then shipped over, requires extensive QC and rework and then cobbled together like a modern RE Ikea dog-box.

      Best bit is anyone with an ethical bone in their body and had a care about the state of things left – see Gresham law – so its a two’fer of institutional destruction/experienced brain drain which means Oz is even less capable to look out for itself and then the new paradigm becomes the new norm for the next cohort of people moving in … as it all circles the drain …

      Yet going back to Howard’s years the cornerstone to everything is to buy a dog box now or be locked out/ be left behind in the property market … and ***getting a life*** … barf ….

    • NorthMEMBER

      All of your observations are right except the political ones. Labour will step on the gas sector as soon as voters demand it.

      Only a very very small part of the pop know any thing about the current energy crisis.

      It will all hit hip pockets and the MSM after July 2022. Shortly thereafter Labour will magically unveil the solution they are presently sitting on.

      I think it makes sense to lull the gas sector into thinking the government’s on their side. Right up until they aren’t. Never shoot your bolt too soon.

  3. sps179MEMBER

    In effect, Albanese is trying to tell voters that energy transition to net zero emissions 2050 is the approved answer to bloodsucking gas cartel of 2015 to 2022.

    Not even Morrison would be that detached from reality.

      • Diogenes the CynicMEMBER

        You could rent or buy a pretty big warehouse in Osborne Park Boom. You could live up the road in Scarborough and surf/swim at Trigg/Scarborough. Or down Margaret River way which I think you know pretty well.

        • boomengineeringMEMBER

          Thanks Diogenes.
          Over 100ton of engineering equipment ,guiloteen 10ton.
          Then ex gym gear still.hanging onto ( dumbbells up to 200lb each, kg as well) 45 leg press has to be dismantled into 5 parts require 2 strong people for each part. The list goes on.
          My nephew owns the crankshaft regrinding business in East Victoria Park area, so I know I couldn’t handle the summer heat so far from the beach, because I aclimatized to the winter surfs and fall apart in summer.
          Speaking of Margaret. The owner of West Suits saw me catch the biggest wave he’s ever seen at 15M swell. I was the only one out as per usual.
          Feeling a bit sheepish atm lost 70k in 6mths in wealth fund, 8 k in the last 3 days, so bunkering down in remorse.
          Thanks again, your area certainly has nicer people.

      • BillMEMBER

        Not that I’ve seen. All ES’s are loved (Other that the druggies that support Essendon).
        Come south. Anywhere after Bunbury is gods own land. We will have direct Busselton flights to Sydney soon with Singapore not far behind.
        You would love it.

    • UpperWestside

      Why export fossil fuel energy ever?
      It took millions of years to accumulate
      What right have a few generations to give it away for glass beads and a flat screen TV
      Use it locally to value add to raw materials
      Or Leave it in the ground for the kids and their kids

      • pfh007.comMEMBER

        UpperWestside

        A National Export Volume Auction would be perfect for that.

        We can set the national export volume as low or as high as we like.

        You would argue for a very a low volume others might argue for a higher volume.

        Either way it is better than the current model whereby the exporters can export as much as they like and compete against other exporters of Australian gas while doing so.

    • Strange EconomicsMEMBER

      Close the second LNG train on Curtis Island.
      There was never enough gas for it, longterm its a stranded asset.

      And put a 10 billion windfall tax on – even the UK Tories do it.

  11. SpiManMEMBER

    This Government has lasted a whole 26 days. They are consigned to the dust-bin of history already!! Thankfully the record for shortest serving PM still belongs to Frank Forde at 7 days.

  12. Grand Funk RailroadMEMBER

    A Market Too far
    Gunnamatta
    16 June, 2022

    The failure of the Energy ‘Market’ isn’t surprising. The surprise is that it has taken so long for the whole concept to deliver a policy failure of such epic proportions it cant be walked away from or denied. Australia’s energy ‘market’ has always been a fraud and has always been known to be one. Now that the concept, as regards energy, is wreckage in the mind everyday Australians it is time to explore more wrecks in other equally faux markets which shape out lives.

    Who’d a thunk it? Participants in Australia’s electricity market – the one providing the energy for every last thing you turn on every day – indulge in ‘unconscionable conduct’ and like ‘gaming the system’.

    There are circa 25 million Australians who aren’t shocked. The bulk of these can recall an era in which almost every State electricity generator was run and owned by a Government – usually State. Those State run operators became ideological pariahs a generation ago as the Hawke Keating era started questioning whether State controlled energy generation and distribution was in the national interest. Back then they assumed that getting the ‘market‘ in would, as in the US and EU, lead to lower prices and greater reliability. But the privatisation of energy in Australia ensured Australians never did see those lower prices, while they’ve watched on without much say as they, as taxpayers, have been taken for patsies by mainly offshore based ‘private’ companies, and with a load of marketing, a meaningless quasi bureaucracy to ’regulate’ and an entire industry of PR and spin which has never got Australians away from the possibility that their electricity system is all about ripping them off – as consumers and taxpayers – and that the organisations in that industry were never about providing reliable cheap power, but about holding Australians to ransom for their bottom lines.

    Those former state controlled outfits – the Victorian SEC first amongst them – were largely created after an initial wave of private sector failure in the 19th and early 20th centuries. The institutions themselves weren’t corporate in any way, they were bureaucratic. Haggling about the bills could be tedious, and variation to what was provided almost unheard of. But almost every decent sized town would have a couple of apprentices with the SEC, and a maintenance team somewhere close. The whole system wasn’t about ‘risk management’ it was about engineering a system with as little failure as possible. In Victoria at least from the late 1960s blackouts were unheard of unless something like a bushfire took out key parts of the system. And those maintenance teams would be dragged out of pubs, and off cricket fields, or called in the small hours to get out and fix things pronto – yes, at double time and a half on long weekends, but they’d be there, and the punters knew they’d be there. That all went out the window as Premiers like Jeff Kennett broke up the system and created private monopolies in both generation and retail and told the public the system was a ‘market’.

    The public knew from the get go that almost none of them were in any form of market. In the first instance they couldn’t swap between one provider and another, and later when they could the variations between offerings were negligible. Those operators who brought product facilities and distribution networks soon discovered that rather than selling product and ensuring supply, a better way to maximise shareholder outcomes was to ‘gold plate’ the system by investing expensively and then writing off the ‘investment’ for taxation concessions off revenues – which were essentially guaranteed by demand from juiced population growth and a world increasingly requiring a computer and range of screens be turned on 24 hours a day. The speciality became deciphering usage rates and times of day and the often surreal ‘service charges’ which padded out bills, on infrastructure which hadn’t been touched since it was installed by public entities in previous generations.

    In the late 1990s the world wised up to carbon energy generation and started on the road to renewable power. To foster that State governments encouraged feed in tariffs. Those electricity retailers and generators knew this would cream them in the long term so they pressured governments to tone down the feed in tariffs, and started talking up the instability created by people feeding into their systems. They’ve let maintenance go, they have held off on investment. They have done their level best to blackmail governments into cost free funding for capacity. If the public wanted to address climate change then the Government could pay them off first. That is what this issue has been about. They havent finished writing off their ‘investment’, and want more. And they’ve been caught short.

    The South Australian government did the right thing in taking up a massive battery rather than taking up being held to ransom. It is Mike Cannon Brookes and Twiggy Forest putting into action plans to ensure Singapore gets solar power generated in Australia at a price better than our current electricity generators and retailers provide Australians.

    But most of all it has been the ideological bedrock of the age to believe in ’markets’ which don’t fail, which deliver the best of all possible outcomes, which are comprised of participants which somehow have public interest at their core, and should be as lightly regulated as possible – all adding up to the best outcome for you. A Liberal government for 20 of the last 26 years has been just what the doctor ordered for this dynamic. A hesitant ALP, unprepared to address NeoLiberal shibboleths, under Rudd and Gillard in the wake of the GFC, was icing on the cake, a bare faced liar heading a government of tongue talking ideological nutters was the cherry on top. That ideological underpinning has neutered the collection of data and analysis of the Public sector, at a Commonwealth and State level, and embeds private suppliers and even labour hire into Public sectors across the nation, giving rise to multi billion dollar public outlays only which only really are about providing a margin for private suppliers – they game that system too. It has been a golden era for privatised providers for that which Australians need, and government has always ridden shotgun in the ideological wagon.

    Now that we have an overt ‘market failure’ all Australians can ask themselves ‘where else do we have market failure?’ with fresh eyes. Their houses aren’t really a market, their children aren’t educated in a market, and their superannuation isn’t really a market either. When they think of players in markets ‘gaming the system’ what do they see when they think of Health Insurance or pharmaceuticals, or Audit and Consulting firms in the Public sector, or property developers banking land? Or Australian gas producers placing Australian consumers at the end of the queue.

    Gaming the system is what profit seeking enterprises, and people, do. And they will do it wherever they think there is no way the buyer can get back at them for doing so.

      • Strange EconomicsMEMBER

        Its an Ozzie market, not a textbook economic market. eg
        Housing is no supply and pumped demand.

        Prices only go up for oligopolies which are protected and well connected

        The Gas Generators must have seen the Enron movie, where Enron blacked out California by scheduling all the maintenance at the same time to get higher prices.

    • The Claw

      A powerful comment there.
      All markets are a form of regulation imposed on their subjects by government. Some markets are simple, fair and competitive, but many markets are not.

  13. BoomToBustMEMBER

    There are 2 main issues at play, the first is lack of domestic at a dirt cheap price for resources owned by the Australian people. The second is lack of taxes, they offshore all the profits, this could easily be solved by taxing all exports at relevant units x price / 10 , that way it wouldn’t matter what they did to manipulate the books, we would get our tax.

  14. Diogenes the CynicMEMBER

    At a stroke they could tax these bloodsuckers back to the Dark Age (fixing the budget), solve the energy crisis by forcing the Gas companies to the table (with the threat of nationalisation and/or jail for executives), institute a creditable long term transition plan to renewables (warding off the challenge from the Teals/Greens) and cement their position in power for a decade. It is amazing they either cannot see or are too afraid to seize this opportunity, Albanese could be PM for longer than Howard.

  18. dodgy as

    In Australia both Coal and Gas are being run as “End-of-Life” products. That’s all anyone really needs to know.
    If you’ve ever managed an End-of-Life product you’ll understand exactly what’s happening. Nobody involved really wants to invest or create new competition because that will just reduce the total amount they’ll make. It is far easier to simply agree on market shares and let the profits fill everyone’s pockets.
    This will continue in one guise or another until the transition is more of less complete and the new technologies hold the upper hand wrt guaranteeing supply at which point it is simply game over for the fossil fuel industry (at least in Australia)
    IMHO the industry will survive longer outside Australia then in Australia so these Importers are the customers that our Aussie miners want to keep happy.
    It sucks that this is happening but it’s naïve to believe that any other outcome is possible.

    • JasonMEMBER

      I think that more applies to coal fired but you aren’t wrong. It is an important transitional issue and now that we have a government who accepts that we are in transition, they will need to solve it (but probably won’t)

      • ColinMEMBER

        No doubt there’s a lot of moving parts to key into the right places for transition. Planning will have to please myriad bloodsucking troughers, & not least it’ll have to fit through the lens of the good book of NEO. So yeah they’ll fumble it from the people’s perspective – but it’s Other Peoples Money, so no matter….. Sigh, time for a walk.

        • dodgy as

          My best advice is to get well away from this train wreck.
          If you can install PV and install a minimalist battery (say 5 kwh) but stay connected to the grid
          When the power drops out you use your battery, it doesn’t solve the real problem but at least it solves your problem.
          This is all part of the transition process, that which we grew up thinking of as ultra reliable we need to start thinking of as might be available might not.
          Third world energy mind set suits a third world people.

          • ColinMEMBER

            Thanks Dodgy. I saw your batteries & someone posted a large HWS storage… I’m taking it in. I’ve been thinking of bringing it forward a couple of years (was waiting for batteries to come of age/price, & next gen panels). But I’m guessing like everything building related I’d be in the Far-Q by now down here…. There’s a local mob proffering RedFlow that I’ve been going to have a chat with. – And then there’s Strata…..

          • dodgy as

            Flow batteries always seem like a good idea but never deliver on their potential.
            I’d stick with Liion / LiPolymer batteries especially if I was doing a small sized on-grid system.
            Lithium batteries are just so well supported and reliable straight from the box.

    • JasonMEMBER

      Fordham is a complete joke. He’s trying to be Alan Jones and while he might be as big a partisan prick as Jones, has nowhere near Jones’ intellect or gravitas.

      Kean should have come back with “Well Ben, if you and your radio station hadn’t tried so hard to get rid of Malcolm Turnbull and laud Scott Morrison and Angus Taylor, we wouldn’t be in this mess.”

    • Swampy

      Wait a minute, I thought coal was totally 100% super dooper ultra ultra reliable? What is this about coal plants not working?!oneoneone11111

      Kean didn’t mention how we’re not reserving gas/sending it all overseas at NB price. Can’t have a convo without talking about that.

      I like Kean but they’ve been sitting on the Empowering Homes pilot for ages – ROLL THAT SUCKA out statewide. We’d put a battery + 3 x PV right now.

    • Rusty Penny

      NZ is about 90% renewable electricity generation, and has one of the highest consumer electricity costs in the world

      it’s a feature, not a bug

  21. PolarBearMEMBER

    Imagine how popular Labor would be if it crashed electricity and gas prices permanently by truly tackling this issue? Let alone the respect they could get from the public for standing up to a bully (mining lobby). Needs someone with balls who sees that the advantage is bigger than the disadvantage of a mining smear campaign.

    • Rusty Penny

      Imagine how popular Labor would be if it crashed electricity and gas prices permanently by truly tackling this issue?

      Imagine their post-parliamentary career options if they did. That will answer why they won’t

      Let alone the respect they could get from the public for standing up to a bully (mining lobby).

      The electorate for the main is apathetic, thus is it difficult to get a gauge on the respect they give.

      It is why reprehensible fringe groups are being catered to, because they are vocal enough to give feedback.

      The only one in recent times who was craven enough to desire wider approval was Kevin Rudd, and he gets white-anted.

      Needs someone with balls who sees that the advantage is bigger than the disadvantage of a mining smear campaign

      Do you see what happened to Christian Porter over unsubstantiated rumours coming from the mouth a BPD maniac?

      Do you know what every person with talents reads from that? Can you figure out why they then say “That’s not for me”.

      • RomulusMEMBER

        Surely you can pick a better victim than Christian Porter. Given the way Friendlyjordies have been treated by the police it doesn’t fill me with any confidence that the police did their investigation of the Porter case properly.
        Also the bloke had a secret $1M trust to fund his defamation case – still nobody knows from where.

        Aside from that he has been going after whistle-blowers – the guy who brought to light the ATO were working to ping small businesses and individuals to meet quotas, Bernard Collary in East Timor etc etc.

        Good riddance to bad rubbish. If more people of his calibre decide not to enter politics then that is a huge positive.

        • Rusty Penny

          Surely you can pick a better victim than Christian Porter. Given the way Friendlyjordies have been treated by the police it doesn’t fill me with any confidence that the police did their investigation of the Porter case properly.
          Also the bloke had a secret $1M trust to fund his defamation case – still nobody knows from where.

          i will base it on the quality of evidence… which is zero….

          I won’t base it on what is fashionable in media.

          For a private defence, it is not the public’s right or even prerogative to know where the trust came from.

          Aside from that he has been going after whistle-blowers – the guy who brought to light the ATO were working to ping small businesses and individuals to meet quotas, Bernard Collary in East Timor etc etc.

          Good riddance to bad rubbish. If more people of his calibre decide not to enter politics then that is a huge positive

          Then you are getting what you want.

          I truly hope we don’t find you complaining about the calibre of people in our parliament.

          • RomulusMEMBER

            Sure that is your prerogative but for me if something looks like a turd, smells like turd and I’m not going to wait for the lab report to tell me its a turd.
            Its not a private defence though – it was a defamation lawsuit where he was the one claiming he was defamed (and then he dropped he case). As the Attorney General – who is responsible for the laws of the country he needs to be beyond reproach when it comes to the law. If he was reinstated to AG after the case then who would have him in his pocket? What laws would he look to change on their behalf. Whole thing stinks to high heaven.

            Why can’t I complain about the calibre of people in govt? If you think Christian Porter was a paragon of excellence as an AG or minister in government then I guess we have very different points of view on this.

          • Mr Walker

            For a private defence, it is not the public’s right or even prerogative to know where the trust came from.

            When that person is supposed to be serving the public and has a lazy million to throw around on an aborted case, yeah, I’d like to know, because it has a bit of a whiff about it.

          • Rusty Penny

            yeah, I’d like to know, because it has a bit of a whiff about it.

            No, you’d like to know because it’s a Lib on the receiving end, and for no other reason than it being a Lib.

          • RomulusMEMBER

            As someone who has voted for both the LNP and ALP in the past. If the facts of the Porter defamation case (secret $1M for the AG) happened to the ALP AG or an Indi AG (if that happens) I would be saying exactly the same thing. It seems like you are hung up on defending the brand.

          • Rusty Penny

            As someone who has voted for both the LNP and ALP in the past. If the facts of the Porter defamation case (secret $1M for the AG) happened to the ALP AG or an Indi AG (if that happens) I would be saying exactly the same thing. It seems like you are hung up on defending the brand.

            I don’t I have ever been accused of ‘protecting’ the LNP brand here or anywhere, so it would be a new experience.

            No, I am saying a person who did display considerable talent, was driven out of parliament by a witch hunt, on the back of an allegation full of holes, coming from BNP maniac, imbued by 20 years of distorted memories, an inconsistent chronology, and some politically desperate people filling her already disabled mind.

            $1 million coming from a luvvy to ping some MSM media trash doesn’t concern me in the slightest. Those in the media need to feel the sharp spike of consequences for their lies.

            The impact of this however is other talented people look at this and go, “no, if something this weak ends a parliamentary career then this parliament gig isn’t for me”….

            When you drive out talent, you’re left with what we have.

          • RomulusMEMBER

            I’m still trying to figure out the considerable talent you refer to with respect to Christian Porter – I don’t see it and plenty of others don’t either but you do and that’s fine.
            I guess Andrew Robb should have used an anonymous trust for his payment from the Chinese (which you are arguing would have been totally fine) instead of taking a public position. Live and learn I guess.

      • CarlosMEMBER

        ‘The electorate for the main is apathetic, thus is it difficult to get a gauge on the respect they give.’ precisely
        the lights need to go out to make it a real crisis, but ………
        energy suppliers know this, so will supply just enough to keep them on, and look like they are saving the day
        labor on the other hand, have zero PR skills, and so will be steamrolled again by their own stupidity

  22. rob barrattMEMBER

    And when you tell peoople on this blog the only difference between the ALP and the LNP is the spelling, they don’t get it. Perhaps when they get their first $800 power bill the penny may drop.
    Only solution? Thomas Jefferson, Teach them to fear the people.

  23. LGMEMBER

    Goes to show how much we need hydrocarbons. We don’t appreciate them and think we can transition away from them, until they are expensive or unavailable.

  24. RomulusMEMBER

    The thing that the ALP/Greens haven’t figured out yet is that Solar & Wind required very cheap funding to cover the upfront costs. If funding rates are 5-7% will be interesting to see how it stacks up against reserved gas.

  26. Bloke

    >electricity prices capped at $300/GJ
    Surely that’s a typo where you meant MWh instead of GJ, since 1MWh = 3.6GJ?
    Also, what’s the source for the traditional price of $25/MWh? AEMO’s dashboard doesn’t show that at all being the case for the several years of average annual prices it shows.

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