There has been some gas price relief in the past few days with the benchmark price at $17.01Gj today. However, this remains well above the price you can buy this same in Europe and Asia for $14.50Gj, not to mention Albo’s failed price caps at $12Gj:
The accompanying power price spike is still going as well, with prices triple what they should be:
And today, I give you Doomed Dutton AKA Ronald Reagan speaking at the Australian Petroleum Production & Exploration gas cartel conference in Adelaide:
“Labor sees businesses and industry as instruments of the state.”
“It wants to use the chains and whips of regulation and tax to control and cannibalise the private sector. Nowhere is this more visible than in energy policy and its interference in the gas industry.
“Anthony Albanese and Chris Bowen will say publicly that they’re behind the gas industry. But of course, their actions betray their words. Labor wants gas gone. The government’s not on your side – let’s be very clear about it.”
Mr Dutton will attack Labor’s gas price caps, reduced funding for gas exploration and projects, additional support for activists waging lawfare, mandatory code of conduct, higher taxes on gas companies, radical industrial relations laws and the safeguard mechanism imposing climate targets on heavy industry.
…“Five years later, Reagan spoke about the success of these policies. He let ‘freedom solve the problem through the magic of the marketplace’ – as he said. That episode in US history is an important lesson about the perils of government intervention. It’s a lesson ignored by the Australian government in 2023.”
Bravo!
Except the same lesson was also ignored by the Turnbull Government in which Peter Dutton was Home Affairs Minister.
It installed the Australian Domestic Gas Security Mechanism (ADGSM), an explicit market control to prevent gas cartel gouging.
That’s the problem, you see. The failed market is not because of government intervention but because there is a cartel controlling supply. Four firms sit atop 90% of east coast reserves. And they buy whatever else is left over as well.
They do this to control the price. So, any move to remove controls will result in a gas price shock as the cartel runs riot.
Amusingly, Dutton will ultimately be proven right versus today’s higher prices in Australia versus everywhere else. But not because we will produce more gas. On the contrary, we will import more of it via LNG regasification terminals, and that will prevent the local cartel from being able to charge us more than our offshore customers for our own gas.
But, don’t confuse this with a good outcome.
It would not have protected the country during the Ukraine War energy shock. It will permanently expose the local economy to foreign gas prices, as well as any price shock to them, anywhere.
And it will erase any energy advantage that Australia ever had, guaranteeing the end of the industrial base for anybody not fastened at the public teet.
Which is why no gas producer anywhere else on Planet Earth and beyond has done it.
One final point. I have been mulling why it is that such a toxic cartel has become possible in Australian energy markets. We certainly have plenty of over-concentrated industries. But they usually operate with at least one eye upon their social licence to operate.
This cartel is different. It is much more like some of the oil robber barons of the 19th century and the Wall Street psychos of this. Viciously avaricious, contemptuous of regulators, scathing of the public.
These are the characteristics of late-cycle American libertarianism, not sensible Australian liberalism.
Doomed Dutton has an uncanny ability to pick a loser.
