In case you missed it, David-Llewellyn-Smith appeared on Sky News last night where he demolished the gas cartel’s fleecing of east coast Australians:
Dave also gave a shorter interview yesterday on ABC news.
ABC Business Editor, Ian Verrender, similarly unloaded on the cartel today:
Our inflation problem largely is being driven by soaring energy costs and not just for petrol. Gas — used for large scale industrial purposes and electricity generation — has skyrocketed.
As of today, AGL will slug its NSW customers with an 18 per cent price hike…
That, in turn, will continue to fuel inflation, possibly forcing the Reserve Bank to hike interest rates beyond what is necessary, rendering large parts of our industrial base unviable and causing a collapse in household spending.
It needn’t be that way.
Australia has vast energy resources. We are one of the world’s biggest exporters of liquefied natural gas and the key to keeping inflation under control is to ensure we keep enough here to power our households and industry at a reasonable price…
For a country flush with the stuff, it should never have come to this…
Until a decade ago, east coast gas was produced solely for Australian consumption and domestic prices were amongst the lowest in the world.
That all changed when a collection of largely foreign-owned multinationals opened up the east coast market for export, promising there would be no domestic shortages…
What we’ve had, however, for more than six years, have been ongoing domestic gas shortages on the east coast and massive price hikes. And, for large periods of time, they’ve sold gas into Asian markets at much lower prices than they sell into the domestic market…
The east coast suppliers send more than 70 per cent of their output to China.
For all the money it earns, however, relatively little of that remains in Australia. While a couple of our big energy companies, Santos and Origin, are players in the east coast exports, the industry is dominated by foreign corporations…
That means most of the profits flow offshore…
What could be done?
Two proposals are being kicked around to try and alleviate the pain of soaring energy prices.
One involves charging a super-profits tax on the gas exporters — all of which are making windfall gains on the back of a brutal war and at the expense of the country which owns the gas resources, along the lines of the UK government’s action.
The other plan is to develop what is known as a gas reservation policy.
A windfall tax could be used to pay compensation to households and businesses who suffer as a result of the soaring cost of energy and electricity.
But a better long-term policy to ensure adequate supply and stable pricing would be to order the exporters to reserve a percentage of their production for the domestic market.
There’s no doubt it works. Western Australia has had just such a policy for more than 16 years and, unsurprisingly, it has not endured the pain currently besetting their east coast cousins.
Electricity prices in the west in the June quarter sat around $68 a megawatt hour. On the east coast, the price was almost four times higher at $264 a megawatt hour…
Profiteering aside, the east coast exporters have a lot to answer for. They overestimated the newly discovered coal seam gas reserves in Queensland and underestimated the difficulties in extracting it, before locking in long-term contracts across Asia. They filled the breach with domestic gas, particularly Santos…
Having promised to curb escalating power costs at the recent election, the only realistic option for the government if it wants to dent inflation is to take decisive action on east coast gas exports.
Well done boys. Two lone voices of reason among Australia’s corrupted business media.
