It’s bad for your health to read the AFR daily. It is page after page of disgrace and ignominy. The once great liberal force of Australian journalism debased to the whorebag of fake libertarian rentier worship.
On no subject is this more obvious than failed energy markets which the AFR presses to make worse:
If Anthony Albanese were a trader, he’d be seriously considering cutting his losses on his government’s poorly judged gas policy right about now.
It’s clear that the Labor government’s gas market intervention has brought investment in new gas projects to a standstill.
As a result, the country faces the prospect of gas supply shortfalls on the east coast, while key trading partners such as Japan and Korea are deeply alarmed that Queensland LNG exporters could be forced to break long-term supply contracts to divert gas to the domestic market.
No, it hasn’t. Billions are being spent every day on new gas wells to feed the cartel’s export customers. Only Gina Rhinehart has pulled a project and who knows or cares why. It’s her loss given the margins under the $12Gj cap (that is now gone anyway as everybody ignores it).
The best way I know to prevent the gas cartel from investing is to let it loose. That is what it was already doing and it will keep doing it to create the artificial shortage wracking the east coast economy.
In short, Karen Maley’s analysis is weak-kneed and wrong, as well as several other adjectives I will refrain from.
It is easy to get gas investment:
- enforce what is in place and the cartel will invest as it whinges;
- if it makes a song and dance about it, then threaten and deploy levies and “use it or lose it” laws to reserves;
- if there are still some idiots that don’t want to make a 100% mark up at $12Gj then nationalise their reserves and auction them off, or develop them in a National Gas Company.
All these things are easy in policy terms. They only take spine.
Given our politicians are cowards, then there is another alternative hinted at in this piece:
The Dutch terminals and tanks giant developing an LNG import terminal in Victoria says it is hopeful it can bring in gas from 2026 as it seeks to capitalise on tight East Coast markets and elevated pricing.
Victoria has set a target of having renewable energy provide 95 per cent of its needs by 2035 but faces an expected gas shortfall as soon as 2026, alarming manufacturers and threatening to underpin a surge in costs.
The problem with LNG terminals is:
- they erase the net back cost advantage,
- they may just join the price fixing, and
- they expose Australia to any global gas price shock, anywhere. They would have nothing to mitigate the Ukraine War shock.
LNG imports should be managed by government. If we were to buy three regasification terminals it would cost a lousy $1bn. Public ownership delivers a bunch of benefits:
- lower cost capital;
- lower cost of gas via a centralised purchasing desk;
- mandated margins, and
- they could operate on a national interest basis of accumulating profits in a fund that was then used to subsidise local sales prices during any external price shock.
This would benchmark prices across the east coast economy. Indeed, the horrific behavior of the gas cartel would see it lose so many customers so fast that it would be forced to compete and underprice its local gas.
There are many, many ways to kill the gas cartel. It just takes guts.
