WA Premier Mark McGowan demolishes east coast gas cartel

Amid all the propaganda from the gas cartel, the captured business media, the Coalition, and neoliberal economists over the Albanese Government’s modest $12 a gigajoule price cap on east coast domestic gas, it is worthwhile listening to the views of Western Australian Premier Mark McGowan, whose state imposed a domestic gas reservation policy in 2006 that has delivered the world’s lowest gas prices in the $5-7 a gigajoule range:

“In 2006, Alan Carpenter brought in our domestic reservation scheme in Western Australia,” [McGowan] said.

“Some of the major oil and gas companies at that point in time said it was a catastrophe, compared us to Venezuela, said there’d be no further investment.

“We’ve had hundreds of billions of dollars of investment since then, despite all those claims, and we’ve got plentiful local gas at a reasonable price.”

This single statement by McGowan shreds any argument against the $12 a gigajoule cap. Western Australia has received the most LNG investment in the nation and exports are booming, all while residents enjoy the world’s cheapest gas and electricity prices.

And because of this gas reservation scheme, Western Australians will see their power bills rise by little more than 2% next year.

The ABC’s Ian Verrender has likewise demolished the east coast gas cartel and its flunkies, noting that scores of other nations have implemented far more draconian measures on energy companies to stop their price gouging:

[Here] is an updated list of countries that have hit energy companies with a range of higher taxes and price controls as they have reaped massive profits, courtesy of Putin’s reign of terror on Ukraine.

In alphabetical order, they are: Austria, Bulgaria, Czech Republic, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Poland, Romania, Spain and the United Kingdom.

Several of those countries, including Norway and the United Kingdom, are major energy producers and exporters. The UK, in particular, has gone in hard against the windfall profits being reaped by energy producers, upping its original 25 per cent windfall profits tax to 35 per cent and extending it until 2028.

The Australian response, by comparison, is incredibly mild and comes off a much lower tax base than, say, Qatar, our biggest rival.

Which raises the question: If energy investors are considering shifting their cash elsewhere, where exactly would that be? West Africa? Venezuela perhaps?…

Unfortunately, Australia’s east coast gas market is anything but an efficient free market…

The competition regulator has been stunned at the level of concentration in the east coast gas market, with joint ventures, marketing agreements and numerous other “commercial arrangements” combining to deliver the three main players 90 per cent of the east coast market…

That market power imbalance was exploited for years by the exporters. They routinely sold Australian gas to Chinese, Korean and Japanese customers at global prices way below the prices they were charging at home, with little if any concern for the principles of “free markets”…

And the domestic gas shortages of recent years that have pushed prices way above global prices came despite explicit promises to government during the industry development phase that this never would occur.

The neoliberal nutters opposing the $12 price cap need to recognise that east coast gas isn’t a functioning market. It is a foreign-owned cartel that is sitting on 90% of reserves, is exporting 72% of east coast supply and making record profits, while gouging domestic users.

The only solution to a cartel-controlled market is direct government intervention. That’s why every other gas exporter on the planet (including Western Australia) does it.

Doing nothing would literally double the energy bills of every household and business east of Western Australia, driving inflation to the moon and forcing the RBA to hike interest rates further. It would usher severe financial stress and a wave of business closures – all to juice the profits of a few foreign-owned energy giants.