Here we are again with another half-arsed solution to the Evil Gas Cartel:
Federal and state governments will stop short of handing the energy market operator direct control of the east coast gas market, but could give AEMO the power to divert “available” gas into domestic markets under a suite of market reforms proposed on Monday.
While the energy market operator will not be given the power to run east coast gas markets, AEMO could be handed the power to order Queensland gas exporters to divert supplies into the east coast gas market to cover shortfalls, or to direct major users – including gas-fired power stations – to curtail operations to preserve gas supplies.
The council of state and federal energy ministers quietly released the proposed changes to AEMO’s gas market remit on Monday, circulating a consultation paper detailing proposed new powers for the energy market operator ahead of legislative and regulatory changes to be passed by state governments ahead of next winter.
Why was it released “quietly”? Is this what the Evil Gas Cartel has quietly agreed to? Is this Chicken Chalmers quietly trying to hide his cowardice again?
What will this achieve? Pretty much nothing unless it has a price trigger.
Does it? Or is it only to be used when the Evil Gas Cartel pushes the boundaries of its social license to operate?
After all, the whole characterisation of the crisis is shockingly wrong. The crisis was not over after winter. It’s still running full bore. The gas price is still at $20Gj today, 500% higher than traditional prices and 300% higher than before the Ukraine War:
$20Gj is the same crisis price that led Malcolm Turnbull to install the Australian Domestic Gas Security Mechanism (ADGSM) in 2017. It’s a price that delivers 5% extra to the CPI over two years with electricity prices up more than 200%.
Not to mention, these prices finish off the last of Australian industry. Unless it is given special government support, which comes with the utter insult of households then subsidising the Evil Gas Cartel via their taxes even as it rips them off blind.
Would the new and improved AEMO be intervening today at $20Gj? I very much doubt it.
Without a clear price trigger based on a cost-plus regulatory model for the Evil Gas Cartel, it will continue to push every law and ethic to the outer limits. That price should be no higher than $7Gj.
This is the most basic understanding of markets and economics which appears entirely absent in our leadership class.
