Albo’s energy war-profiteers kill power, banks and food

Ah, the Australia Tax, brought to you by David John Wissler Knox who, you may recall, said this:

As Santos worked toward approving its company-transforming Gladstone LNG project at the start of this decade, managing ­director David Knox made the sensible statement that he would approve one LNG train, capable of exporting the equivalent of half the east coast’s gas demand, rather than two because the venture did not yet have enough gas for the second.

“You’ve got to be absolutely confident when you sanction trains that you’ve got the full gas supply to meet your contractual obligations that you’ve signed out with the buyers,” Mr Knox told ­investors in August 2010 when asked why the plan was to sanction just one train first up.

“In order to do it (approve the second train) we need to have ­absolute confidence ourselves that we’ve got all the molecules in order to fill that second train.”

But in the months ahead, things changed. In January, 2011, the Peter Coates-chaired Santos board approved a $US16 billion plan to go ahead with two LNG trains from the beginning….as a result of the decision and a series of other factors, GLNG last quarter had to buy more than half the gas it exported from other parties.

And the rest is history. Australia has had a rolling gas shortage crisis ever since the two Santos plants opened.

Today, Mr Knox is the Chairman at Snowy Hydro and now we’ve got this:

Snowy 2.0 will not begin dispatching power until late this decade after another round of unexpected project blowouts, potentially forcing states led by Victoria and NSW to temper their opposition to using coal and gas in a planned capacity market mechanism.

The Australian Financial Review has learnt that a series of issues involving contractors and construction at the former Coalition government’s flagship solution to the accelerating collapse of coal power mean project owner Snowy Hydro is being forced to delay the start date for power generation by as long as 19 months, or to around 2028.

The setback has stunned the new Labor government as the $5.1 billion pumped hydro scheme – one of the world’s most ambitious engineering projects, and currently under construction high in the Snowy Mountains wilderness in southern NSW – was originally commissioned to offset the closure of crumbling power stations such as AGL Energy’s Liddell in the Hunter Valley, which shuts down next year.

The power of the energy export cartels that Mr Knox helped create, and has now helped not to backfill, is killing the economy:

  • energy retailers are dying in droves;
  • the banking system is being put to the sword as the RBA hopelessly chases energy prices;
  • all manner of public amenities are being squeezed, including hospitals.

Today, we can gleefully add that the war-profiteering energy cartels are killing food production too:

Australia’s energy crisis is likely to slow food and fibre production as rising electricity prices exacerbate fertiliser shortages and increase input costs for energy-intensive sectors such as horticulture and dairy, the agriculture industry has warned.

The industry’s peak body, the National Farmers Federation, has briefed new agriculture minister Murray Watt on the issue, and he is “working closely” with energy minister Chris Bowen on “possible solutions”.

…She said agricultural commodities were generally exposed to energy prices but were especially vulnerable to increases in electricity prices such as those happening now, with dairy, horticulture and irrigated farming particularly at risk.

We can all see where this is going: subsidies that will only make it worse. One by one, every single sector will come to Yellow-belly Bowen and be granted special favours.

To wit:

Labor is refusing to rule out further cash payments to combat the “perfect storm” contributing to the soaring cost of living.

Millions of low and middle income earners will receive a one-off $420 offset to their tax return this year.

That’s in addition to the existing offset of up to $1080 for workers earning less than $126,000.

The offsets were measures featured in the previous Coalition government’s final budget and were touted by then-Treasurer Josh Frydenberg as proportionate measures to combat rising costs.

Now, the new government says it will do what it takes to drive down prices.

Why will this make it worse?

  • Such subsidies pass straight through the energy user’s hands to the energy war-profiteers, encouraging them to do worse, not better.
  • They will cause higher taxes and higher interest rates to boot, as the RBA stated openly this week, and house prices will crash.

In short, by failing to bring the energy cartels to account with domestic reservation and war levies, Albo’s cowards are crashing the economy.

Houses and Holes
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Comments

  1. Maybe it’s necessary just to kill this stupid ideology for once and for all (ha!). Hope I don’t get too hungry.

    • Oh Totes where art thouMEMBER

      Yep. Because the realities of peak oil, and other resources will bite on the way down. We will never solve this predicament until we stop chasing economic growth. We need to transition to a steady state economy, consume way less, waste far less and transition to non fossil fuel energy. It’s going to be a hell of a ride.

      • Aah, a realist amongst MB readers. The whole world is about to find out the OIl Emperor has no clothes…..

        However, there will be no ‘transition to a steady state economy’ as a) the building, mining and replacement of so-called ‘renewables’ is also highly energy-intensive, b) and many of the minerals & materials required for the ‘energy transition’ are already in short supply.

        So the whole ‘Renewable Energy Transition’ is just more pie-in-the-sky green-wash-wishful-thinking disguising our refusal to contemplate that a civilisation entirely built on non-renewable resources is an idiocy that can only end one way – in collapse.

    • “Putting more renewable energy on the grid will not guarantee lower prices because all the talk about how cheap it is rests on an average, or “levelised”, cost of generation, not the actual cost of sustaining a power source that cannot deliver continuous energy unsupported.

      As J.P. Morgan’s annual energy paper points out, those costs include transmission, back-up thermal power and, eventually, utility-scale storage. Whatever fills the intermittent power void won’t be cheap – a study commissioned by Industry Super Australia calculated the cost of battery storage for Australia at $6.5 trillion. To that add the rising cost of ancillary services needed to keep the retooled electricity system secure and reliable, a service that was once a byproduct of electricity generation in old-world power stations.”

  2. DingwallMEMBER

    Any government seems paralysed by these lobbyists. Each individual seems to have lobbyists that they listen to and therefore the problem and solution gets pulled in 20 directions. No wonder we get a decision years late and severely watered down or just plain wrong.
    Like an independent RBA governor we need some independent strategy groups ….. ie ban lobbyists

  3. Cool, so we give more money to an economic sector, so prices go will go up and mitigate the benefit?

    Can any one say, ‘First Gas Buyers Grant’? 😉

    Labor know about the evils of First Home Buyers grant, but giving extra money to the ultra-hungry energy will have a different effect, I’m sure…lololololol…

    Oh, and whilst you’re at it Labor, could you import a whole lot more low-skilled labour so we can fix the energy problem by having more people consume energy? OKTHANX.

    A generational economic and political opportunity for Labor, to save the economy, whilst also saving households and businesses…

    I sense that ‘One-Term Albo’ is going to catch on.

  4. Oh Totes where art thouMEMBER

    Now, the new government says it will do what it takes to drive down prices.

    Except they won’t. Because the answer is, and has been staring them in the face. Break the gas cartel. Call Parliament back next week, legislate east coast reservation starting July 1st and fix the problem. The gas cartel will throw a massive tantrum and run attack ads. But at the next election Labor can say they brought prices down. Second term Albo – it’s staring you right in the face.

    • Easy there. In 3 years voters couldn’t recall what the energy crisis was and how it got resolved.
      So, we may have to wait about 2 years for action on that.

  5. pyjamasbeforechristMEMBER

    Small business roof top solar grants should be part of the fix. So many small businesses still that have daytime energy use don’t have solar yet. So many small businesses would benefit from roof top solar at this point and would only need a small incentive to make them commit.