What a sector of scabs. Leading us off is scab central at the AFR:
An SA government source said most of the state’s gas was already contracted for the long term at between $8 and $11 a gigajoule, so royalty losses caused by a price cap were not a concern.
But the potential adverse impact in investment for such brazen intervention was of real concern, and the government was appealing to federal Energy Minister Chris Bowen not to “do anything stupid”, even on a temporary basis.
“What’s temporary? One year? Two years?” asked the source.
Who cares. $12Gj is high enough to extract virtually every gas molecule in Australia. Certainly high enough for QLD, NSW and NT reserves. Nobody even knows if VIC has any.
As well, how and why is one anonymous trolling bureaucrat misrepresented as the entire state of SA?
More:
…managing director of Posco Australia (Senex Energy), Ben Kim, said the prospect of gas intervention and the recent decision by the Queensland government to increase royalties risked the company’s outlook on Australia.
Then sell your assets. There are plenty of buyers.
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An EnergyQuest report commissioned by gas lobby Australian Petroleum Production and Exploration Association (APPEA) warns that about 19 years of potential gas supply – 39,000 petajoules – would remain “commercially stranded” and in the ground if a price cap held prices around the level they were at last year.
Energy Quest was paid to say this. ‘Nuff said.
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APPEA chief executive Samantha McCulloch said the report demonstrated the risk of intervention and that the government should allow the existing mechanisms of a heads of agreement and code of conduct to work.
She paid for the report to say this. Feminising the subject doesn’t make it less evil. Ignore.
“Price caps on gas sales will be counterproductive, constraining supply in the medium to long term. This will lead to higher bills, impacting those who can least afford it,” Morné Engelbrecht, chief executive officer of Beach Energy, told The Australian Financial Review.
Then lower your price now. Fark. At $12Gj tonnes (all) supply will arrive. If it doesn’t then we are being gamed and “use it or lose it” laws must apply. But without the price cap, the price won’t come down regardless of new supply because the market has devolved into an export cartel that gouges by nature, already “impacting those who can least afford it”.
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Santos lashed out at the prospect of price caps, and pointed his finger at the Australian Workers Union for seeking wage increases while calling for price controls.
“The AWU is seeking pay rises that will add to the cost of gas supply at the same time as they are wanting gas price caps for other sectors,” a spokesperson said. “Some manufacturers are making record profits at the same time as they are wanting gas price caps.”
Santos is the rogue firm most responsible for the entire mess. It is a pathological liar and should be dismissed, if not nationalised.
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“Woodside continues to believe that the east coast energy market issue will not be solved by regulation or intervention alone, and needs a comprehensive, longer-term solution that requires both infrastructure to be in place and more gas supply to be made available,” a spokeswoman said.
There is no “market”. Only regulation can fix a war-profiteering export cartel.
More:
Coal is the dominant source of Australia’s electricity generation – accounting for about two-thirds – but Credit Suisse energy analyst Saul Kavonic said a price cap would drive a spike in demand for gas to be used for power generation.
That could lead to logistical constraints in the delivery of gas, given limited capacity in the gas pipeline grid, “raising risk of a blackout next year, alongside acute longer-term consequences from less supply”.
Not if coal is capped as well. Der. Renewables will still roll out because they are cheaper than both.
Finally, some sense came from the abundant capital that will buy pretty much whatever assets the scab grabbers want to sell:
De la Rey Venter, the CEO of MidOcean Energy, the EIG-owned company set to take Origin Energy’s LNG business in the $18.4 billion takeover proposal for Origin, however, voiced confidence that any intervention to rein in prices will be only temporary and will not work against the need longer term to ensure more supply to meet energy demand on the east coast.
And from UBS:
“We believe the impact of government intervention in the east coast gas market will not be material to Santos’ earnings as we do not believe a price cap, likely worst case, will be applied at a price below Santos’ current realised east coast gas prices of about $13/GJ in 3Q22.“, UBS said in a note on Wednesday.
In other words, all of the gas is immensely profitable at $12Gj.
What a sad sack of greedy scabs the AFR and its repulsive game of mates have become. There is no public support for this disgraceful mining performance. Smash them.
There is one tricky issue with coal:
Anthony Albanese’s national plan to lower energy prices is under threat amid an eleventh-hour request for the NSW and Queensland governments to impose their own domestic coal price caps, in a move that would avoid the commonwealth having to pay tens of billions of dollars in compensation to producers.
The Albanese government gave the two state governments an initial briefing this week on its plan to bring down energy prices, requesting they impose their own price caps on coal.
The NSW government is understood to have received legal advice from the crown solicitor that, under the Constitution, the commonwealth could legally set its own national price cap on coal but would need to compensate coal producers.
The legal advice stated that the commonwealth could implement a coal price cap itself on the condition it pay compensation on “just terms”. To lower the price enough for consumers to receive a tangible benefit, it is estimated that tens of billions of dollars in compensation would need to be paid.
Get with the program NSW and QLD.
Make no mistake, anything other than policies to stop energy war-profiteering is an economic disaster for both states. Electricity futures are pricing an additional 3-4% added to CPI next year. That will hammer household income and wealth as interest rates skyrocket and growth crashes:
This is the real sovereign risk. Brought about by the gas cartel and coal baron scabs.
