Some academic claims we know what will be in Albo’s new gas reservation policy.
While full details are yet to be announced, we know there will be three main elements: a mandatory reservation volume, a gas security incentive, and competitive domestic pricing.
The mandatory reservation will require gas producers to reserve a portion of their supply for the domestic market, likely to be around 50–100 petajoules in its first year of operation. That would represent roughly 10–20% of the 520PJ burned in gas power stations as of 2021–22.
The gas security incentive is a strategic move to encourage producers to offer more gas on the domestic market. It will likely work by levying a charge to gas exports, excluding those under long-term contract. The charge is, however, a temporary measure and when a producer fulfils its annual obligation to supply gas to the domestic market, the levy will be returned to them.
The scheme is likely to include competitive domestic pricing to ensure domestic purchasers can buy gas at prices that reflect the cost of production rather than the substantially higher international export prices. This is likely to stabilise gas prices and significantly reduce our dependence on volatile international markets.
That is Peter Dutton’s policy, not Albo’s. Is this true? Signals from other reports are not encouraging.
Labor is weighing an unprecedented federal intervention to start bulk-buying natural gas from east-coast producers and selling it to local businesses at discounted rates as it seeks to head off shutdowns of manufacturing plants battling soaring energy costs.
This move would complement a domestic gas reservation scheme, due to be announced as early as next week. The federal government would use its purchasing power to act as a “group buyer” to sell gas to particular manufacturers at discounted rates.
The scheme is under serious consideration, according to government sources not authorised to speak publicly, but is not yet finalised. It has been backed by some of the nation’s biggest manufacturers and the Australian Workers’ Union.
If the reservation mechanism works, why do we need a single desk gas purchaser? Will a single desk purchaser even work? I doubt it. The volumes sold to industry are about 10% of overall gas consumption. The cartel can afford to drive a tough bargain. These industries are paying $18Gj. They need to pay half, not 10% off.
And what about everybody else: households, wider businesses, and electricity markets? Are these not entitled to a single desk? Why doesn’t the government buy all of the gas we already own from the cartel at an inflated price?
Albo is the ‘yes man’ to every parasite with a voice: the cartel, the unions, foreign buyers, everybody except you.
This is developing into a classic Albo policy schmozzle, led by the same Albanese principle of upsetting nobody that has taken the nation absolutely nowhere since his election.
For gas, it will lead to the same policy dog’s breakfast that we already have. Who will decide how much gas we need? Who will pay for the governance? What’s the tax treatment? How will it all be gamed? Why aren’t we charging appropriate taxes? Why don’t we keep the export levy revenue, if that is the mechanism that is used?
To wit, the press has no idea.
Representatives from the Santos-led GLNG venture met with the federal government this week to offer “concessions” in the hope of avoiding a heavy-handed regulatory intervention.
GLNG, the only LNG producer that withdraws more gas from the domestic market than it puts in, told government officials it would not contract any new domestic gas to meet export obligations to buyers in Asia once its existing agreements expire in 2027, according to sources briefed on the talks.
GLNG is already gaming the system by using joint ventures (Senex) and acquisitions (Meridian) to pretend it is not buying third-party gas. What will be done to prevent more of the same? Why are we consulting with the thieves?
We don’t need a new spaghetti bowl of failing policies that the government doesn’t dare to enforce.
We need a big, dumb rule to govern the cartel and guarantee lower prices. Supply can take care of itself.
That is not the ADGSM, the price floor, the Code of Conduct or any of the dog’s vomit discussed on this page.
Apply a 100% export levy on every export dollar above $7Gj. The export levy guarantees the local price will be $7Gj, and producers will pump more, not less, to use volumes to increase profits as margins are smashed.
The $10bn should be kept by the treasury; the inflation problem will die overnight, household budgets will boom, the energy transition will accelerate, and the LNP will be left naked and screaming.
It is a total no-brainer, but the government has no brain.
