Just how corrupt is Albo? Everybody wants him to crush the gas cartel: 80% of Australians, all of industry and most miners, even the gas cartel itself. Now, farmers.
Santos’s blighted Narrabri gas project is facing a new hurdle, with the country’s largest state farming body threatening legal action in a bid to force the state and federal governments to dump the proposal.
NSW Farmers acting chief executive Mike Guerin said he had “gotten the band back together” to fight the $3.6bn project, after confirming on Tuesday they had engaged senior counsel from the firm Holman Webb.
Mr Guerin’s involvement comes after he was a central figure at the peak body for Queensland’s rural producers, AgForce, as they fought against mining giant Glencore’s proposal to inject and store 330,000 tonnes of carbon dioxide in the Great Artesian Basin.
…NSW Nationals leader Gurmesh Singh told The Australian he supported the project, after last week saying he needed time to formulate a stance. “The Narrabri gas project has the potential to underpin roughly half of our state’s gas supply, and it’s time to get on with it,” he said, adding farmers “must be treated with respect and compensated appropriately for any pipeline impacts”.
God save me from gas idiots. Does NSW have a state gas reservation policy? No. So, how is Narrabri going to supply 50% of NSW gas?
Even though it is a domestically reserved project, Narrabri will not resolve the East Coast shortage. Its developer, Santos, is part of the East Coast gas export cartel, and it will just shift other volumes offshore through its underutilised GLNG LNG operation.
Could we kindly reiterate this point? The problem is not a shortage of gas. The issue is that an export cartel controls 90% of the gas reserves, which allows it to set prices based on export volumes.
The farmers have a much better idea of what is going on.
“We export most of our gas, so if it’s about domestic supply and certainty, the notion we need to extract more gas is not backed by the facts,” he said.
“We just need to stop sending it offshore.”
Exactly. But it also matters how we do it. The solutions proposed by Albo’s cartel-captured cowards are inadequate.
Export caps, or credits, do not ensure the competitive local sale of sufficient gas to significantly lower prices.
The market cannot be massaged because there is no market. It has FAILED.
What we need is a big, dumb mechanism to force gas prices into a cost-plus regulatory model. And we have one: export levies.
If we apply a 100% levy on every gas molecule sold overseas above $7Gj then the local price will crash to that level.
The cartel can’t cut production in response, because that would lead to even lower profits. It will produce as much gas as possible to offset the margin squeeze with higher volumes.
At $7Gj, every proven reserve on the East Coast is plenty profitable. The following table presents all-in costs, indicating that much of this gas is already significantly cheaper on a cash basis because the infrastructure is a sunk cost that has often been written off.
The combined levies for the Treasury will be huge from a 100% export levy set at $7Gj. Refer to these two charts from Greg Jericho.
The East Coast gas export cartel accounts for about one-third of these revenues. It is siphoning off roughly $10 billion in super profits from QLD each year, which should be collected as tax.
Worse, this $10bn in economic rent is multiplied many times over as an economic cost because gas determines electricity prices. Electricity prices spill into cost-push inflation for everything else, becoming the cost-of-living shock you are enjoying.
This 40% energy shock is equivalent to 2% CPI inflation by itself, and given that businesses use 70% of the energy, we can probably add another 1.4% in spillovers.
Energy rebates delayed it, but now, as they roll off, it is roaring again.
This is literally the renewed cost-of-living shock all by itself.
