Tag: Energy Security

Australia Is Plain Stupid As Gas Prices Roar!

Today I want to revisit one of Australia’s most stupid policies which are in turn driving manufacturing offshore, and hitting households and businesses with higher costs, and forcing the Government to spend tax-payer funds on energy subsidies for households to try and keep inflation down.

We are in the unspeakable position where Australia, who owns huge, though dwindling natural gas supplies, has allowed large multinational corporations to extract massive amounts of gas from the reserve, and then transform this resource into LNG – Liquefied natural gas is natural gas that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. The Australia Institute showed that more gas is used for conversion than for household use in Australia and 82% is used for exports.

So we are exposed to the international gas price which would be equivalent to Saudi Arabia paying international oil prices at home, which of course they do not. Fuel is dirt cheap there.

This is a massive mess, created by many years of bad policy, across both shades of Government. It shows the power of big Gas to call the shots, of politicians not thinking strategically, and spooking us with vague “sovereign risk” issues if we were to seek to renegotiate those existing gas contracts, and impose a real domestic reservation and export levies, which they could and should.

So riddle me this: Why are countries with no gas busy building up stockpiles to cope with renewable intermittency when a country like Australia that is swimming in gas is exporting it all to China while building up zero inventory to cope with its own seasonal fluctuations? Utter madness, with Australian households and businesses paying the price.

http://www.martinnorth.com/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Australia Is Plain Stupid As Gas Prices Roar!
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Australia Is Plain Stupid As Gas Prices Roar!

Today I want to revisit one of Australia’s most stupid policies which are in turn driving manufacturing offshore, and hitting households and businesses with higher costs, and forcing the Government to spend tax-payer funds on energy subsidies for households to try and keep inflation down.

We are in the unspeakable position where Australia, who owns huge, though dwindling natural gas supplies, has allowed large multinational corporations to extract massive amounts of gas from the reserve, and then transform this resource into LNG – Liquefied natural gas is natural gas that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. The Australia Institute showed that more gas is used for conversion than for household use in Australia and 82% is used for exports.

So we are exposed to the international gas price which would be equivalent to Saudi Arabia paying international oil prices at home, which of course they do not. Fuel is dirt cheap there.

This is a massive mess, created by many years of bad policy, across both shades of Government. It shows the power of big Gas to call the shots, of politicians not thinking strategically, and spooking us with vague “sovereign risk” issues if we were to seek to renegotiate those existing gas contracts, and impose a real domestic reservation and export levies, which they could and should.

So riddle me this: Why are countries with no gas busy building up stockpiles to cope with renewable intermittency when a country like Australia that is swimming in gas is exporting it all to China while building up zero inventory to cope with its own seasonal fluctuations? Utter madness, with Australian households and businesses paying the price.

The Gas Problem That Will Crush Australians!

Last week the ACCC released their Gas Inquiry 2017-2030 interim report, and it makes horrifying reading. It is such a monumental stuff-up over a couple of generations, it’s hard to believe the corporations did not deliberately set up to maximise profit at the expense of ordinary Australians, while successive Governments were complicit, either because they dared not confront big gas, were scared of the consequences via sovereign risks of changing the rules or simply were ignorantly led by the nose.

All this has stoked inflation via higher electricity prices to the point where now the Government is using more taxpayer money to hand support payments to households. You can’t make this stuff up! Mind you the ACCC report which is very detailed manages to skate round the core issue.

Of late the government has made minor changes to overhaul regulations, which in theory allows it to intervene and limit exports of LNG. In practice though little has changed, and unlike in WA where is the a reservation for domestic supply, the east coast is stuffed.

As I discussed with Robbie Barwick yesterday this is one of the greatest scandals Governments have created for ordinary Australians, but yet again, no signs of bold action, in the form of gas reservation, just a muddle in which people are being taken to the cleaners, even as the Government offers more “help” on electricity prices, at the expense of taxpayers.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

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

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
The Gas Problem That Will Crush Australians!
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The Gas Problem That Will Crush Australians!

Last week the ACCC released their Gas Inquiry 2017-2030 interim report, and it makes horrifying reading. It is such a monumental stuff-up over a couple of generations, it’s hard to believe the corporations did not deliberately set up to maximise profit at the expense of ordinary Australians, while successive Governments were complicit, either because they dared not confront big gas, were scared of the consequences via sovereign risks of changing the rules or simply were ignorantly led by the nose.

All this has stoked inflation via higher electricity prices to the point where now the Government is using more taxpayer money to hand support payments to households. You can’t make this stuff up! Mind you the ACCC report which is very detailed manages to skate round the core issue.

Of late the government has made minor changes to overhaul regulations, which in theory allows it to intervene and limit exports of LNG. In practice though little has changed, and unlike in WA where is the a reservation for domestic supply, the east coast is stuffed.

As I discussed with Robbie Barwick yesterday this is one of the greatest scandals Governments have created for ordinary Australians, but yet again, no signs of bold action, in the form of gas reservation, just a muddle in which people are being taken to the cleaners, even as the Government offers more “help” on electricity prices, at the expense of taxpayers.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

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

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/