Tag: Energy Security

Worst Ever Great Idea: Australia IMPORTS LNG!

I have been talking about the absolutely stupid Government policy of gas supply, as a few big multinational companies continue to pump and export gas owned by Australia abroad, using energy from said gas sufficient to support Australian need, in order to liquidity it for export.

The stupidity stems from the lack of an east coast reservation approach (something which Western Australia has done well with a mandated domestic gas reservation policy and there energy prices are lower as a result), with exporters making massive profits (most of which do not hit Australian shores either) thanks to high international demand.

Australia does not have a physical shortage of gas so much as an artificial one, given most of the country’s supplies are exported via long-term contracts to lucrative markets in North Asia.

Gas has become a proxy fuel in two ways. First the marginal price of gas – which is roughly 5 times what it should be – drives the cost of electricity, which is also high – even after government support for households. In addition, the use of gas as a transition strategy despite its high contribution to the climate predicament we are in, blunts other more sustainable long term options. Gas is just as much a problem as oil and coal, a harmful fossil fuel that will doom the world to rising temperatures and ever more pollution.
But nevertheless here we are, because successive Governments appear under the thumb of big gas, and mumble on about Australia’s reputation risk if they acted in the interests of Australians!

The Australian Energy Market Operator (AEMO) is forecasting that within just a few short years, supplies of gas on the east coast could fall well short of demand at peak times, typically in winter.

So now, for the first time, and in spite of Australia’s position as one of the world’s biggest gas exporters, the country is preparing to do something that was once unthinkable. The scene of the crime of a place I know well, Port Kembla in New South Wales, near Wollongong and about 100 k’s south of Sydney.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Worst Ever Great Idea: Australia IMPORTS LNG!
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Worst Ever Great Idea: Australia IMPORTS LNG!

I have been talking about the absolutely stupid Government policy of gas supply, as a few big multinational companies continue to pump and export gas owned by Australia abroad, using energy from said gas sufficient to support Australian need, in order to liquidity it for export.

The stupidity stems from the lack of an east coast reservation approach (something which Western Australia has done well with a mandated domestic gas reservation policy and there energy prices are lower as a result), with exporters making massive profits (most of which do not hit Australian shores either) thanks to high international demand.

Australia does not have a physical shortage of gas so much as an artificial one, given most of the country’s supplies are exported via long-term contracts to lucrative markets in North Asia.

Gas has become a proxy fuel in two ways. First the marginal price of gas – which is roughly 5 times what it should be – drives the cost of electricity, which is also high – even after government support for households. In addition, the use of gas as a transition strategy despite its high contribution to the climate predicament we are in, blunts other more sustainable long term options. Gas is just as much a problem as oil and coal, a harmful fossil fuel that will doom the world to rising temperatures and ever more pollution.
But nevertheless here we are, because successive Governments appear under the thumb of big gas, and mumble on about Australia’s reputation risk if they acted in the interests of Australians!

The Australian Energy Market Operator (AEMO) is forecasting that within just a few short years, supplies of gas on the east coast could fall well short of demand at peak times, typically in winter.

So now, for the first time, and in spite of Australia’s position as one of the world’s biggest gas exporters, the country is preparing to do something that was once unthinkable. The scene of the crime of a place I know well, Port Kembla in New South Wales, near Wollongong and about 100 k’s south of Sydney.

Gaslighting By The Gas Producers Exposed As Australians Pay!

Australia is paying way too much for its home-grown gas, as the over-exporting of gas has driven East Coast gas prices 400% higher than historical average prices leading to higher inflation and a stalled energy transition. This is a huge impost on living standards via direct bill shocks and spills over to energy-intensive manufacturing, which includes building materials, making the housing crisis even worse.

Yet there’s more as The Australia Institute, an independent public policy think tank based in Canberra, just published a report titled Australia’s great gas giveaway – How Australia gives gas to multinational corporations for free.

In addition to exposing Australians to the full international price of gas (yes gas produced in Australia and shipped off shore by huge international companies) due to stupid Government policy, the Institute says that Australian governments charge no royalties on 56% of the gas that is exported from Australia. Over the last four years, multinational companies made $149 billion exporting gas they got for free.

If royalties had been charged on this gas, at least $13.3 billion in revenue could have been raised.

Australia exports LNG from 10 installations. Six of these projects—four of the five in Western Australia and both in the Northern Territory—pay no state or federal royalties. Australia exports 56% of its gas through these facilities.

Sure, the industry is subject to taxes – which are distinct from royalties – including income tax and the petroleum resource rent tax levied on profits. But Institute said the oil and gas companies should be paying royalties as well as taxes on profits and a failure to do so consistently meant Australians were missing out on a fair return on their resources.

ACT Senator David Pocock said the gas industry was taking part in “state-sanctioned daylight robbery”. “We are seeing a betrayal of Australians and our future by the major parties. We are seeing state capture by the gas industry,” he said. “They are absolute leeches on this country and this has to end.”

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Gaslighting By The Gas Producers Exposed As Australians Pay!
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Gaslighting By The Gas Producers Exposed As Australians Pay!

Australia is paying way too much for its home-grown gas, as the over-exporting of gas has driven East Coast gas prices 400% higher than historical average prices leading to higher inflation and a stalled energy transition. This is a huge impost on living standards via direct bill shocks and spills over to energy-intensive manufacturing, which includes building materials, making the housing crisis even worse.

Yet there’s more as The Australia Institute, an independent public policy think tank based in Canberra, just published a report titled Australia’s great gas giveaway – How Australia gives gas to multinational corporations for free.

In addition to exposing Australians to the full international price of gas (yes gas produced in Australia and shipped off shore by huge international companies) due to stupid Government policy, the Institute says that Australian governments charge no royalties on 56% of the gas that is exported from Australia. Over the last four years, multinational companies made $149 billion exporting gas they got for free.

If royalties had been charged on this gas, at least $13.3 billion in revenue could have been raised.

Australia exports LNG from 10 installations. Six of these projects—four of the five in Western Australia and both in the Northern Territory—pay no state or federal royalties. Australia exports 56% of its gas through these facilities.

Sure, the industry is subject to taxes – which are distinct from royalties – including income tax and the petroleum resource rent tax levied on profits. But Institute said the oil and gas companies should be paying royalties as well as taxes on profits and a failure to do so consistently meant Australians were missing out on a fair return on their resources.

ACT Senator David Pocock said the gas industry was taking part in “state-sanctioned daylight robbery”. “We are seeing a betrayal of Australians and our future by the major parties. We are seeing state capture by the gas industry,” he said. “They are absolute leeches on this country and this has to end.”

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Government Policy Makes Households Pay through The Nose For Energy!

The latest forward view of Australian Wholesale Energy Prices out to 2027 show prices for East Coast consumption will remain at nose-bleed levels out as far as 2027, according to data from the Australian Energy market.

There is a reason for this, in that marginal wholesale power prices are remarkably set based on the cost of gas, via LNG in the international markets. This will pressure get worse as coal fired generation is retired across Australia.

Governments of various flavours have messed up here from a policy perspective, in that a small number of international operators are the Australian gas cartel of Santos, Woodside, Origin, Shell, Exxon and friends.

The Governments latest solution to the high price of power, was to set a policy price cap of $12 a gigajoule in the domestic market that is unless cartel members meet certain exemptions such as investing in new gas projects.

That $12 cap was set after receiving warnings from Treasury that energy prices were set to soar by about 50 per cent over 2023 and the first half of 2024. As a result of the intervention, power prices were reduced, by an estimated $230 dollars a year, which is mere chicken feed, given the massive run up in price. Estimates are the average household bill will rise by $700 by mid-2024 compared to June 2022, based on Treasury figures. And In practice the $12 cap is behaving as a floor, as the cartel ships more gas offshore.

All of this means that China who can often on-sells the gas to Europe at a healthy profit, is still seeing cheaper gas prices than in Australia!

The solution of course is for the Government to increase the local reservation and reduce the price cap (floor). But that would bring them up against the political and economic powers of the gas cartel.

So the bottom line is that Australian East Coast households are being taken to the cleaners, one reason why costs of living are so high, while local manufacturers are being priced out, and reducing the capacity for local production.

Which begs the question is this simple stupidity, or something much worse. Who really are pulling the economic strings in the country? Game of Mates anyone?

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Government Policy Makes Households Pay through The Nose For Energy!
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Government Policy Makes Households Pay through The Nose For Energy!

The latest forward view of Australian Wholesale Energy Prices out to 2027 show prices for East Coast consumption will remain at nose-bleed levels out as far as 2027, according to data from the Australian Energy market.

There is a reason for this, in that marginal wholesale power prices are remarkably set based on the cost of gas, via LNG in the international markets. This will pressure get worse as coal fired generation is retired across Australia.

Governments of various flavours have messed up here from a policy perspective, in that a small number of international operators are the Australian gas cartel of Santos, Woodside, Origin, Shell, Exxon and friends.

The Governments latest solution to the high price of power, was to set a policy price cap of $12 a gigajoule in the domestic market that is unless cartel members meet certain exemptions such as investing in new gas projects.

That $12 cap was set after receiving warnings from Treasury that energy prices were set to soar by about 50 per cent over 2023 and the first half of 2024. As a result of the intervention, power prices were reduced, by an estimated $230 dollars a year, which is mere chicken feed, given the massive run up in price. Estimates are the average household bill will rise by $700 by mid-2024 compared to June 2022, based on Treasury figures. And In practice the $12 cap is behaving as a floor, as the cartel ships more gas offshore.

All of this means that China who can often on-sells the gas to Europe at a healthy profit, is still seeing cheaper gas prices than in Australia!

The solution of course is for the Government to increase the local reservation and reduce the price cap (floor). But that would bring them up against the political and economic powers of the gas cartel.

So the bottom line is that Australian East Coast households are being taken to the cleaners, one reason why costs of living are so high, while local manufacturers are being priced out, and reducing the capacity for local production.

Which begs the question is this simple stupidity, or something much worse. Who really are pulling the economic strings in the country? Game of Mates anyone?

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Peak LNG Stupidity!

Bloomberg reported yesterday that the US has become the world’s biggest exporter of liquefied natural gas for the first time, with 2023 shipments overtaking leading suppliers Australia and Qatar.

The US exported 91.2 million metric tons of LNG in 2023, a record for the country, according to data through Dec. 31 compiled by Bloomberg. The expanded output was due to last year’s restart of Freeport LNG in Texas, which had been shuttered for months following a June 2022 fire and explosion. Qatar, the top LNG supplier in 2022, saw its volumes shrink for the first time since at least 2016, with a 1.9% decline dropping the nation into third spot for shipments of the super-chilled fuel. Australia ranked second, with exports that were little changed from 2022.

Unlike East Coast Australia, the US has a domestic gas reservation scheme in place, which has mostly succeeded in keeping domestic gas prices low.

And the mooted A$80 Billion Deal between Woodside Energy and Santos could also put more upward pressure on Australian domestic gas prices.

“Both Santos and Woodside are material domestic gas producers, which may create market concentration concerns,” RBC Capital Markets analyst Gordon Ramsay said in a note.

It makes no sense to give any member of the gas export cartel – Origin, Woodside, Santos, EXXON or Shell – greater control of gas import volumes. Remember East Coast Electricity prices are driven by the marginal cost of LNG.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Peak LNG Stupidity!
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Peak LNG Stupidity!

Bloomberg reported yesterday that the US has become the world’s biggest exporter of liquefied natural gas for the first time, with 2023 shipments overtaking leading suppliers Australia and Qatar.

The US exported 91.2 million metric tons of LNG in 2023, a record for the country, according to data through Dec. 31 compiled by Bloomberg. The expanded output was due to last year’s restart of Freeport LNG in Texas, which had been shuttered for months following a June 2022 fire and explosion. Qatar, the top LNG supplier in 2022, saw its volumes shrink for the first time since at least 2016, with a 1.9% decline dropping the nation into third spot for shipments of the super-chilled fuel. Australia ranked second, with exports that were little changed from 2022.

Unlike East Coast Australia, the US has a domestic gas reservation scheme in place, which has mostly succeeded in keeping domestic gas prices low.

And the mooted A$80 Billion Deal between Woodside Energy and Santos could also put more upward pressure on Australian domestic gas prices.

“Both Santos and Woodside are material domestic gas producers, which may create market concentration concerns,” RBC Capital Markets analyst Gordon Ramsay said in a note.

It makes no sense to give any member of the gas export cartel – Origin, Woodside, Santos, EXXON or Shell – greater control of gas import volumes. Remember East Coast Electricity prices are driven by the marginal cost of LNG.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Energy Bills: You Ain’t Seen Nothing Yet!… [Podcast]

The UK is an object lesson in stupidity as energy prices go higher and bills to households more than double in a few short months. Some are threatening to start a payment strike, as people will be forced to trade off heating versus eating.

But we in Australia are, according to the recent RBA Statement, also exposed to persistently rising energy bills. This is of course caused by the gas cartel as I have been highlighting. But the truth is, where the UK is going we may well follow, so expect persistent higher inflation in coming months. UK inflation is predicted to reach 13%, thanks to high energy costs – so just how high will we be going?

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Energy Bills: You Ain’t Seen Nothing Yet!... [Podcast]
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Energy Bills: You Ain’t Seen Nothing Yet!…

The UK is an object lesson in stupidity as energy prices go higher and bills to households more than double in a few short months. Some are threatening to start a payment strike, as people will be forced to trade off heating versus eating.

But we in Australia are, according to the recent RBA Statement, also exposed to persistently rising energy bills. This is of course caused by the gas cartel as I have been highlighting. But the truth is, where the UK is going we may well follow, so expect persistent higher inflation in coming months. UK inflation is predicted to reach 13%, thanks to high energy costs – so just how high will we be going?

Go to the Walk The World Universe at https://walktheworld.com.au/