Here’s the hilarity of the east coast energy crisis laid bare:
Origin Energy has slashed its energy markets earnings forecast for 2022 by a quarter and withdrawn earnings guidance for the 2023 financial year amid huge volatility in electricity markets and coal supply problems at its Eraring plant in NSW.
The power operator said energy markets underlying earnings would fall by 26 per cent at the mid-range to $310m-$460m from the original guidance of $450m-$600m.
It blamed a series of coal supply problems at Eraring, Australia‘s largest coal station, which its plans to shut as soon as mid-2025.
Group underlying earnings are forecast at the mid-point of the original $1.95bn$2.25bn range, due to Origin‘s gas business running hot. It now expects integrated gas earnings of $1.7bn-$1.8bn from the original $1.5bn-$1.65bn range.
Origin is an integrated energy producer of both gas and electricity.
So, on one hand, it is a member of the vicious east coast gas export cartel which is enjoying massive war-profiteering windfall gains by shipping too much gas offshore and driving local prices crazy.
Yet, as an electricity producer needing coal, it is also being gutted by the east coast coal operators which are now doing exactly the same thing!
The answer is as obvious as it is ridiculous that we are allowing war-profiteering to smash our energy markets and, soon enough, the broader economy via skyrocketing inflation and interest rates.
Domestically reserve enough gas and coal for local use to crash prices. Use the ADGSM for gas. Use an export levy for coal.
Voila! Australian export prices rise and domestic prices crater making us the richest people on the planet.
Or, do nothing and let war-profiteering halve house prices leading to a one-term Labor government.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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