The strangest energy crisis in history rolls on today as NEM prices soared yesterday:
The cause of this bizarre crisis is well-known to readers. Gas and coal export cartels are war-profiteering on the back of the Ukraine conflict by over-exporting and leaving Australians short of fuel. That is all there is to it.
Yet, the media, regulators and government are completely lost in response.
The media hardly mentions what is an existential economic crisis. The regulator is a headless chook and is now warning of imminent catastrophe, while passing on costs to everybody except the guilty parties:
Gas shortages in Victoria threaten to plunge the nation’s electricity market into a fresh crisis, with the power grid operator warning the system will remain fragile for weeks as consumers face a hit of hundreds of millions of dollars from the last electricity system failure.
Levels at Victoria’s underground gas storage plant, Iona, have dropped to a record low and forced the Australian Energy Market Operator to put an official system security threat in place until the end of September.
The low storage levels could force authorities to invoke an emergency supply guarantee for the second time this year. AEMO is also considering intervening in the market to limit the amount of gas taken from Iona.
The government has absolutely NO IDEA what it is doing:
Climate Minister Chris Bowen is open to a change that would allow future governments to increase Labor’s 2030 emissions reduction target, if that is what it takes to win the support of the Greens for the legislation.
Mr Bowen said a so-called ratchet mechanism, which would enable Labor’s 2030 target of a 43 per cent reduction over 2005 levels to be lifted without legislation, was not necessary as the target was already a floor, rather than a ceiling.
While this is nice and all, gas and power markets have collapsed today.
Finally, at the head of the circus is “Silly” Jim Chalmers, your thinktank-trained treasurer, who is happy to observe the carnage from the comfort of his ivory tower while doing nothing to stop it:
Chalmers said he would update almost all the budget’s key economic forecasts with many people likely to be surprised by the extent of the hit to real wages.
“[It] will be in many ways confronting when it comes to our expectations of inflation, when it comes to the impact of interest rate rises on growth, when it comes to what this spike in inflation means for real wages,” he said.
“There will be aspects of this ministerial statement that people will find confronting.”
The March budget forecast real wages to go backwards by 1.5 per cent in the just completed 2021-22 financial year. Wages were then expected to out-pace inflation through 2022-23 and 2023-24.
But since then, inflation has lifted by much more than expected. The Reserve Bank now believes it could reach 7 per cent by year’s end.
Chalmers’ economic update is likely to show real wages going backwards through 2022-23, which would mark a third successive year of inflation outpacing wages growth.
Hoocoodanode? The coal and gas cartels are adding 3-5% to the CPI over the year. Silly Jim Chalmers is actually warning about his own energy inaction.
Goods prices are now falling. Services prices will shortly follow as house prices implode. What is not coming down is energy via coal and gas and the flow through to energy-intensive production for stuff like food:
For Australia, this is ludicrous. We are an energy superpower. The second largest LNG exporter and one of the largest coal exporters. Allowing global prices to drive local prices sky high for us is insane.
Yet here we have Silly Jim describing the problem while offering no solutions. Indeed, he’s actually trying to make it worse:
Any move by China to end a near two-year ban on Australian coal imports would be a key step in restoring ties between the nations, according to Australian Treasurer Jim Chalmers.
Chinese bureaucrats are proposing that senior leaders should authorize the resumption of purchases as tensions begin to ease, and on concerns global coal supply may tighten as Western-led sanctions on Russian energy exports kick in.
“An important part of stabilizing relations with China is to see some of those sanctions lifted on our exporters here in Australia,” Chalmers told Sky News television Sunday. “We would like to see it happen and we’d like to see it not stop there — it should extend to the restrictions that are placed on some of our other exports as well.”
Silly Jim is light years away from doing what is required. Domestic reservation of a minor amount of coal and gas to crash local prices is being given no rhetorical framework. Even better solutions like export tariffs and super-profits taxes have been explicitly eschewed or gotten no mention at all.
Whatever was left of Labor that gave two hoots about Aussie workers and their living standards is dead and buried under an avalanche of virtue-signaling bullshit.
