Don’t be fooled. This is complete rubbish:
Surging food inflation is tipped to moderate in the second half of this financial year, Coles Group boss Steven Cain says, but shoppers are already paying less for some fresh foods – iceberg lettuce is back on the shelf at $3 a head and other producers are bouncing back from natural disasters.
Also, the chief executive of Domino’s Pizza Enterprises said there were early signs that price pressures associated with key ingredients such as wheat and cheese were starting to flatten out.
Wrong! This is entirely dependent upon one outcome above all others, this chart must keep falling:
Electricity and gas prices are key inputs into food prices. Food prices will not peak unless they do.
The problem is, they’re not. The only reason that gas prices have fallen from $65Gj to $17Gj, guiding power prices as well, is the LNG exporter APLNG has one LNG export train shut for maintenance. The moment it reopens, in days, the gas cartel will immediately tighten the local market and reconnect local gas prices to global.
Where are they at today? Converted to AUD, the December futures contract for North Asia (JKM) is at $103 for December this year and barely falls for a year after that:
This is where Australian gas prices will go within days as the criminal LNG export cartel imposes them at home. Electricity prices will immediately skyrocket 730% from today’s very inflated price. The CPI will add over 20% from these price spikes alone and food prices will go unfathomably bananas.
This is not conjecture. It is happening in Europe today and Australia is next if the criminal gas export cartel is allowed to do it within days:
The only thing that can stop this is the Albanese Government and, more specifically, the cartel-captured Resources Minister Mad King.
While she is busy whoring negotiating with the cartel, at least one former gas cartel whore analyst has seen sense:
In its submission to the Department of Industry, Science and Resources, the Grattan Institute said the ADGSM needed to become more responsive to the issue of both gas shortfalls and high prices.
It said a windfall profit tax on the domestic sales of LNG producers, set by a reference price from the Australian Competition and Consumer Commission, would be the best way to ensure competitively priced gas was offered to local businesses and the manufacturing sector.
“This tax could be triggered by an ACCC estimate of a fair price range based on prior periods’ pricing,” the Grattan Institute report said.
“It would have the advantage of directly addressing the current problem, would automatically fall away with the windfall profits, and is defensible against claims of sovereign risk.”
The institute’s energy program director, Tony Wood, said it would be a “political no-brainer” to introduce the windfall profit tax, despite the Albanese government’s pre-election commitment of no new taxes.
He said a reference price, which could be a market price of gas before the war in Ukraine rather than the current LNG netback price, would determine when a windfall profit tax kicked in.
“You just tell gas producers that if you charge more than that we’re going to hit you with a 100 per cent profit tax. They can still make money on the gas into the domestic market, but it would just be at a fair price,” he said.
“The advantage of a windfall profit tax, rather than embedding a reference price into the ADGSM or price trigger which becomes structural, is it disappears as soon as the windfall profit disappears.”
This is not a windfall profits tax. That would be based upon profits and margins. Grattan’s idea, rather, should be called an export levy, which is based upon the prices of the commodity. It is the ideal solution because it both crashes the local price and reaps the gains of war windfall profits to which the firms have absolutely no right.
Obviously, Grattan can’t call it what it is because that would be a hat tip to MB. The price of such silliness is that if you call it a tax, it is harder to sell.
Grattan helped create the most vicious energy cartel on earth so there’s not much point standing on ceremony today!
