Australia’s energy shit fight has cost governments power. It has cost businesses and households billions. It has cost incredible quantities of wasted time and column inches.
Yet the heart of the problem is so simple. Australia’s ONLY energy challenge is the gas cartel.
Witness what has happened over the past few months. The gas cartel put a squeeze on supply and prices rose. Electricity prices rose in lockstep because spot gas prices set the marginal cost of power.
Now, with whatever deal has been done on the gas Code of Conduct out of the way, the cartel has released the valves and let gas flow:
So electricity prices have also crashed:
This is not a surprise to anyone. Gas was always planned to play this role in the grid as we transitioned to renewables.
It is the lower carbon peaking fuel that was supposed to add firming power as coal was replaced by sun and wind. When renewables were intermittent, the gas would fill the gap, until renewable power storage like batteries and pumped hydro caught up.
The ONLY thing that went wrong with this plan – literally, the cause of ALL of the angst, agonising and bloodletting – is that east coast gas reserves were vacuumed up by an export cartel which created an artificial shortage for Australia.
I don’t know if the gas Code of Conduct will finally correct the wrong promulgated by the Gillard Government in allowing the formation of the cartel.
But if it does, then all of our energy problems are solved at once. Cheap gas will:
- deliver affordable, clean power;
- sustain manufacturing, and
- resolve our oil imports dependency.
If not then:
- more governments will fall;
- manufacturing will disappear, and
- the energy transition will deliver blackouts and huge inflation shocks.
The stakes are that high. Yet the iMSM never even discusses it.
