Australia’s great power shock correction continues today as the gas price sits at around $17Gj allowing electricity prices to establish a new lower range, though still triple more traditional prices:
Believe it or not, these prices are still high enough to double utility bills in the next year!
The egregious leftie press has taken a moment out from woke worship to run with the issue at last. The Guardian:
The energy ministers of New South Wales and Victoria have taken a swipe at gas companies exporting Australian resources overseas, claiming their pursuit of profits led to the recent energy crisis which they labeled “bizarre”.
Federal, state and territory energy ministers agreed on Friday to extend the powers of the Australian Energy Market Operator (Aemo) to better manage gas supply issues ahead of an expected shortfall in 2023, including giving the regulator more data on energy supply and allowing it to contract more storage capacity.
But the NSW treasurer, Matt Kean, claimed supply shortfalls had come from gas companies prioritising profits above local power users, while Victoria’s Lily D’Ambrosio said June’s power crisis should never have been allowed to happen.
…“This country produces more than sufficient gas to meet our domestic needs … the problem is too much of it has been allowed to be exported at our own cost and that’s got to change,” she said.
“We never want to see a repeat of what’s happened in the last two or three months, where this country produces more than enough gas but for some set of bizarre reasons we had a gas crisis.”
Kean said gas companies had been chasing “super profits”. D’Ambrosio agreed, saying “we’ve got to get on top of that”.
The energy minister’s communique noted the federal government’s plans to reform the Australian Domestic Gas Supply Mechanism – the so-called “gas trigger”, which would allow authorities to request companies supply more gas to the local market. The current mechanism can only be activated from 1 January the following year, but the federal government is investigating reforms to those rules.
Kean said he would support the federal government prioritising the needs of domestic gas users.
This follows QLD getting on board:
Queensland Treasurer Cameron Dick says he would be willing to receive lower gas royalties should lucrative LNG exports be diverted into the domestic market to avoid a potential east coast shortage next year.
When was the last time you heard any state was happy to let revenue fall?
Even the bleeding heart Saturday Paper got the memo:
Everyone feels the effects of increased energy prices, which affect almost every point of the economy. And while exogenous factors play a big part, so do the failures of domestic policy. The steep rises in gas and electricity prices, says McKibbin, are largely a consequence of the long climate wars.
“This is actually what happens when you don’t get policy right,” he says. “You don’t get your energy policy right, your climate policy right. That entire problem should have been dealt with by the politicians and the fiscal authorities. But instead, everything kept being kicked down the road.”
The pain of higher interest rates will obviously be felt most acutely by people who have a lot of debt. In particular, that is young people and those on lower incomes, lured into buying homes to live in on the basis of the Reserve Bank’s promise that interest rates would not increase for years – a promise made just a few months before the central bank started raising them.
Those who could not afford to buy into Australia’s housing market – inflated by shortages of supply, low interest rates and excessive stimulus from government – are also suffering sharp increases in rents as property investors pass on their increased costs.
That is the broader story of this economic crisis: those whose incomes depend on their own labour are suffering disproportionately compared with those whose incomes come from capital.
The most obvious example of this is energy companies, which are profiteering from the disruption to global fuel supplies caused by the invasion of Ukraine. Last week the secretary-general of the United Nations, António Guterres, noted that the combined profits of the big energy companies were close to $US100 billion in just the first three months of this year. He called this immoral.
“I urge governments to tax these excessive profits, and use the funds to support the most vulnerable people through these difficult times,” he said.
Given that Australia is a major energy producer, and that coal and gas companies operating here are reporting revenues doubling or tripling, one might think the federal government would take heed of Guterres, or the host of other voices advocating a tax on windfall profits, including Nobel prize-winning economist Joseph Stiglitz, who met with Chalmers last month, or former Treasury secretary Ken Henry, who steered Australia through the global financial crisis.
But Chalmers has ruled it out. Instead, he and the government have left it to the Reserve Bank – which they continually stress operates independently of government – to deal with the situation.
This, says McKibbin, is not fair to the RBA, which has been left to “try and do about 15 things with one instrument”.
The blunt instrument of interest rates cannot target those profiteering from crisis. And while energy companies are the most egregious offenders, they are far from the only businesses to have taken advantage of supply-side disruptions and continued strong demand to jack up prices.
The problem is that the Albanese Government is stacked with policy cowards and even though it has coverage now from the press, the ACCC, the RBA, the state premiers, Labor, Liberal and Greens parties, other countries, and eminent global economists, its paranoia about upsetting miners has put the gas-guzzling Mad King in charge of negotiations for a new domestic reservation regime.
Give the people what they want. A $7Gj price trigger in an updated and more dynamic domestic reservation regime for gas.
Then do coal as well.
