We all thought during the last election campaign that Anthony Albanese was playing a clever small target strategy to unseat a deranged Morrison Government. I no longer think so.
Rather, what we were seeing was the timorous character of the Albanese opposition and now government. It is cowardly. Fearful of conflict. Withdrawn from reality.
Soon enough we’ll be adding dishonesty to that list because it is an unsellable mix of poltroonary. In fact, that starts today:
Warning there was “real pressure” on families, he said he hoped that rates would not rise as hard and fast as some analysts including the ANZ bank have predicted.
“Well, of course, the Reserve Bank sets these rates independently of government,” Mr Albanese said.
“But they need to be careful that they don’t overreach as well.
“Of course, the Reserve Bank declared a while ago, and they’ve conceded the error that interest rates would, would stay at the extraordinarily low levels where they were for a period of years up to 2024, and that hasn’t been the case.”
“Well, they need to make sure that they get the assessment, right,” the Prime Minister responded.
“There are some circumstances that could not have been foreseen. One thing that has had a real impact globally is the Russian invasion of Ukraine.
“That has had an impact on energy prices that then has gone through to supply chains and had a real impact right around the world.”
No, it hasn’t. Many energy suppliers to the world are enjoying an absolute boom. Take Saudi Arabia. It had an inflation burst owing to the pandemic but, despite booming trade income, has since been enjoying calm inflationary conditions:
How is this relevant to Australia? Because we are the Saudi Arabia of gas and it is that commodity (along with coal) that is driving an inflation and RBA overshoot.
Australia produces huge amounts of cheap gas. But the Albanese Government has enabled the local price to skyrocket from $5Gj to $55Gj in Sydney today by refusing to curb the excesses of a gas export cartel which has been leaving the local economy short.
It’s the equivalent of Saudi Arabian oil exporters charging local drivers $20 per litre for petrol.
Worse, gas sets the marginal cost of electricity on the east coast so this combined energy shock will add 5% to the CPI over the next year:
The RBA is telling us all of this in black and white:
Ahead of the release of the June quarter Consumer Price Index (CPI) at the end of July, members noted that domestic inflationary pressures, including those outside of the labour market, continued to build. Non-labour input cost pressures were evident across a range of industries. Adverse weather conditions had affected the prices of some fresh produce. Rents were expected to pick up in response to tightening rental market conditions across most of the country. Wholesale electricity and gas prices had also increased sharply in recent months, reflecting domestic supply disruptions during a period of increased demand. The effect of these increases on retail electricity and gas prices was expected to be evident later in the year, since state subsidies and hedging arrangements had limited the near-term pass-through. More generally, firms in the Bank’s liaison program had indicated a greater propensity to pass through cost increases to consumer prices. As a result of these price pressures, inflation was expected to increase in year-ended terms through the remainder of 2022.
Gas drives food input costs and just about everything else as well via electricity.
Victoria is reeling as the shortage goes nuclear:
The Australian Energy Market Operator has ordered two gas-fired power plants owned by Snowy Hydro in Victoria to shut down in a bid to keep the gas supply operating safely and securely at the correct pressure for customers.
The order, which lasts until October 1 and represents a further worsening of the energy crisis hitting the eastern states, came as Queensland’s three LNG exporters scrambled to meet a request from the AEMO on Wednesday to send more gas south to avoid shortages in power generation.
Origin Energy’s Australian Pacific LNG venture, Santos’ GLNG venture and Shell’s QCLNG venture have all been asked to stump up more gas to send south as levels of gas in Victoria’s main storage plant head to risky low levels that could destabilise the supply network.
The exporters are not the solution, they are the problem. At various times since 2014, these plants have helped exhaust Bass Strait gas by vacuuming it up and exporting because they are short of their promised QLD reserves.
And let’s not forget the ironies piling up here. The gentlemen today running Snowy Hydro, David Knox, is the same bloke that promised the gas export cartel had enough gas way back in 2010:
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.
I only wish that that was the worst of it. Today’s crisis is only a downpayment on worse to come. Every year hence we have less local gas until Australia, the Saudi Arabia of gas, has no gas at all in 2035, unless we import it:
All it takes to end this sovereign suicide is a stroke of Albo’s quivering pen. He could install domestic reservation for gas to crash the price, export levies to crash the price and take the cartel’s war-profiteering gains, or super profits taxes to recycle as energy subsidies for everybody else.
Instead, Albo has chosen to protect the evil energy export cartels that send 71% of our east coast gas to China, and blame-shift to the RBA the consequences of gutted real incomes and crashed house prices.
What an absolute shocker.
