Albo’s cowards save Germans as energy shock cooks Aussies

Over the weekend, there was some price relief in the NEM as the weather turned more friendly for renewables:

Needless to say, this will be very short-term. Not least because the bizarre world of Australian energy rolls on with the mass idiocy of energy discussion still paramount. Energy powers that be that set the course of discussion to solutions that will have no impact for years:

The Energy Security Board, which serves as the top adviser to state and federal energy ministers, is proposing an insurance-like policy to help keep the lights on during the transition.

Known as a capacity market, the policy would involve paying energy providers to be available when the system needs them, typically during periods of stress.

Federal Energy Minister Chris Bowen is leading the charge in supporting the proposal, backed by NSW, South Australia, Queensland, and Tasmania, and wants it to start by 2025 or even earlier.

But even the suggestion that payments could be made to coal or gas-fired generators has been a bridge too far for the Victorian government, which claims the payments would amount to subsidies for fossil fuels.

Instead, Victoria is arguing that only zero-emissions technologies, such as batteries, should be eligible under such a scheme.

Honestly, who cares? The current energy crisis is driven by fuel costs not capacity limitations. Coal plants have shut down because it is uneconomic to produce power with coal prices up 400% not because there aren’t enough of them.

The capacity mechanism is addressing symptoms, not causes.

On the real problem, that low-tax and no-tax foreign-owned cartels have over-exported gas and coal, there is nothing but bad news as Albo’s cowards rack up the frequent flyer miles fixing everybody else’s problems:

Australia has moved to strengthen its energy partnership with Germany as Europe’s biggest economy steps up its search for alternative energy sources to Russia following Moscow’s war in Ukraine.

Germany’s energy minister, Robert Habeck has been crisscrossing the globe in an urgent campaign to stitch together energy deals to try to end Berlin’s dependence on Russian energy supplies. German fears of being plunged into an economic crisis are growing if Russia completely turns off crucial gas supplies to the nation.

Australia has so far not been included in Habeck’s travels. But Berlin’s plans to draw up a new national security strategy, with an emphasis on seeking out more safe and reliable sources of energy, has presented Australia with the chance to eventually beef up its energy exports to Europe and its powerhouse economy.

Investing in a stronger energy relationship with Germany and Europe is a good idea. It is a downpayment on European aid in the future conflict with China.

However, it comes at a very steep price. Why is the Australian Government so intent on rescuing Europe from an energy crisis that it has allowed to arrive at home?

The European and Australian gas prices are at parity around $43Gj. Likewise, European and Australian coal prices are at parity around $400.

This, despite Australia digging it up virtually free with an enormous surplus to domestic needs and Europe having none at all.

Worse, making promises to Europe when Australia’s domestic energy crisis is so bad sets up an unsustainable relationship with Europe. When Australians realise that their energy inflation is going to deliver a 100% bill shock over the next year, and their house prices are being eviscerated by an RBA that can’t affect such prices, how are they going to respond?

We run the risk of abandoning Europe at the worst moment as domestic politics boil over with anger.

The more promises we make to Europe, the less scope Albo’s cowards have to deploy solutions domestically. The greater the volume commitments to export, the less the chance of domestic reservation of energy commodities for Australian use.

That leaves Albo’s cowards only with solutions that will ignite a war with mining.  Domestic reservation would only have slightly dented their profits. But the alternative (and better) solutions of export levies or super-profits taxes will wipe out the miner’s war-profiteering gains.

As much as I’d like to think that Albo’s cowards are deliberately moving towards these optimal solutions, I have no faith whatsoever that they will deploy them. Their post-Rudd fear of mining is palpable from thousands of miles away.

Meaning that the base case for regular Aussies is that they are going to wear the full brunt of the taxless, foreign-owned, war-profiterring gouge of the energy cartels.

Houses and Holes
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Comments

  1. Fishing72MEMBER

    I don’t accept that it’s fear of a mining-tax style anti-ALP propaganda campaign behind Albo’s behaviour. The ALP has a full term in front of them in which the mining companies are powerless to act with any effect.

    There’s more to it.

    • Oh Totes where art thouMEMBER

      What’s the saying, never attribute to malice when incompetence will do.

      If there’s some big grander plan I’m all ears. However fear is the Occam’s Razor explaination here. Fear of a fight with the gas cartel or other mining interests.

      • Fishing72MEMBER

        Outright corruption is the most obvious answer. Far more believable than the abstract fear of a smear campaign which would only eventuate years down the track long after the public has gotten over the issue.

        BTW….that saying about not attributing to malice what may be attributable to incompetence is not even correct half of the time. Incompetence is attributed because greed and ambition are unpalatable attitudes to cop to when the wheels fall off. Incompetence won’t get you to the top of politics if you don’t have a sturdy foundation of corruption to start.

        • ‘a smear campaign which would only eventuate years down the track’
          Saw an ad on tv last night from the minerals council i think, spriuking the new ‘Mining Tax’ here in qld. Its started.

  2. Fishing72MEMBER

    Pure corruption?

    Ideology?

    I’m not sure but the scary possibility of a years-away advertising campaign against them, after they’ve delivered household saving energy bill discounts to millions of Australians appears extremely unlikely. So unlikely as to be not feasible. The mining tax worked because the East coast voters weren’t personally paying for the greed of the miners, this is not the case with the energy shock coming straight from the pockets of the entire Eastern seaboard.

  3. Muttafukaburrasaurus.MEMBER

    Multinational mining should be forced to comply with our national interests, they won’t have such easy profits in other “Chinese” controlled jurisdictions. They don’t employ/ benifit a tenth of the local interests they claim.
    They should be told simply- Pay up or fuck off

  4. I don’t think any of australia’s politicians have the leadership or vision to use Australia’s strategic energy advantage to position our country as the long term beneficiary of plentiful gas supplies for the next 50 years. We could use cheap gas supplies to grow our industrial base, manufacturing fertilisers, chemicals and other products as the world gets burned by the Russians and Chinese. We could use targeted export measures to benefit our allies. We could use this to phase out coal and then invest in renewable energy over the coming decades.

    What I fear is that Labor and the Greens have decided this is a once in a lifetime opportunity to use high energy prices to fight climate change as the existential crisis they believe it is, so they will blunder through a slow process of poorly planned investment while the australian economy gets steamrolled and we end up with a high priced, unreliable electricty grid. In the meantime other countries with an energy advantage will seize the position we could have had.

    • PalimpsestMEMBER

      One possibility is that they are waiting for the new power bills to hit the public and use the outrage as ‘top cover’ to do something. However, I have no evidence for that. @Fishing should note just how effective the Carbon lobby has been at taking out both Labour and coalition politicians that speak out, and over a long period of time. It’s a large swathe of money they can deploy, and a deadly advertising campaign. They don’t have to wait for elections, they can just go and influence tomorrow. Every MSM masthead would follow.

      • ‘One possibility is that they are waiting for the new power bills to hit the public and use the outrage as ‘top cover’ to do something.’
        ahh yes, the age old cry …… ‘Do Something !’
        They will do something alright, they’ll fold like cheap suit.
        Fuel excise extended for another 12 mths, and power rebates $100 a quarter for all resi. $1T deficit will be toast. I can see this govt headed for peak stupid as they panic at the knowledge that they gone tossed a sh!t sandwich, and one term is their destiny.

    • We should absolutely be using our energy advantage to our economic advantage (like every other country with one does) after all even the mainstream economists & neocons all agree that countries with “comparative advantage” but we are not using our abundant cheap energy to build our economy. If Germany can competitively produce chemicals and similar goods why can’t we with such cheap energy?

  5. The best scenario I can think of is that they are softening up the cartel with more export contracts and when the dotted line is signed it will be a caveat for a domestic reserve. The whole thing is cooked they way they are going about it.

    • Display NameMEMBER

      Any new gas is too far in the future to have any bearing on the next 12 months. If energy prices stay high for 12 months, Labour is cooked I suspect. Guaranteed one term. Not that I think the LNP would do any different. Neither will act in the best interests of the tax payer, so it will be an inevitable continued primary vote decline.

      • Any new gas is too

        sensible for the Fake Greens to allow.

        Greens open to backing Labor’s 43% emissions target but demand ban on new gas projects.

    • gballardMEMBER

      The yuan has also been appreciating against the AUD but I agree there are wider implications.