With friends like AIG, who needs enemies?
Tennant Reed, senior national adviser to the Australian Industry Group, said household energy price hikes of at least 8-15% were already supported by the regulator’s default price hike last week. . It was likely that price would rise further in the months and years to come, he said.
Some customers of smaller retailers who did not have their own access to power generation would see prices rise even more, he said, noting that one company had told customers prices could double.
He said that in the current geopolitical climate and in the face of a global energy crisis, any move by Australia to reduce energy exports would not be welcomed by export customers.
He said government policies to improve transmission to incorporate more renewable energy, in addition to state government efforts to improve household efficiency and replace gas appliances with electric alternatives, such as that induction cooking and heat pumps were the right answers, but they would take years to implement.
In the short term, he said federal and state governments could consider subsidizing households hit hardest by the crisis.
According to its first estimates, if governments targeted the most vulnerable 10% of households and small businesses, such an effort would cost around $6 billion.
Woodside’s O’Neill said market volatility was proof that “our response to the climate crisis [could] trigger an energy crisis”.
“I’m afraid some of that is happening in Australia, where the hardening capacity has really gone down, there’s not as much hardening capacity as there has been historically,” she said. declared. “And so when coal-fired electricity goes offline, that means a lot of gas consumption and there just isn’t enough gas to meet that demand.”
AIG is like children in kindergarten. In the adult world, export contracts are broken all the time. It is common to do so. To declare force majeure and continue to cut some export shipments. There is no sovereign risk when the risk is on the sovereign.
AIG’s other idea is crazy. In effect, it is a proposal to subsidize the war profits of gas and coal companies using the broader tax base. If you do this, the energy cartels will continue to drive prices up and run amok forever.
Moreover, he will to get worse the inflationary consequences of the shock as energy prices dump inflation on everything more punters still have money to spend!
As for Woodside, he only joined the East Coast gas cartel this week when he completed the takeover of BHP’s Gippsland joint venture with Exxon. He knows there is an incredible amount of gas. But he sold everything to the cartel exporters:
More bad ideas were offered to your ABC which published a half-armed report which editorializes without authority:
The mechanism can only be used in limited circumstances, and it is not clear that current price spikes would be enough to invoke it.
Resources Minister, the new Madeleine King, is expected to determine that there will be a shortage of gas on the market next year, not just high prices.
Even then, the earliest date on which export controls could be imposed is January next year, which would do nothing to help the immediate problem of price spikes for businesses and households.
Of course, the government could rewrite the terms of the mechanism to circumvent these problems.
But there are other reasons to be careful before pulling the trigger.
If supply contracts are interrupted, it could affect Australia’s reputation as a reliable trading partner, which could have long-term ramifications for the resource sector.
And cutting off critical energy supplies to allies we support to push back Russia might not be a wise diplomatic move either.
Who said these things? Just the reporter? Then put a line through them.
Since 2014, Australia has been experiencing an ongoing energy crisis due to gas shortages. This is a structural sovereign risk that requires a structural sovereign solution. Not fixing it and leaving export customers in doubt is just as bad in the long run.
As for the supply of European allies, of course, go ahead. Three-quarters of gas from the East goes to China where it is used, in part, to make weapons that threaten Australia. Cut these volumes.
In fact, China sells LNG shipments anyway because of an overabundance!
China, the world’s largest LNG importer, has emerged as a seller of LNG export cargoes as domestic demand declines amid slowing pandemic movements in Shanghai and fears that similar restrictions will be imposed elsewhere in the world. countries as authorities act decisively to stem the spread of COVID-19.
“Except for the three big national oil companies – PetroChina, Sinopec and CNOOC – which have the obligation to ensure the supply of natural gas, other LNG importers have recently resold a large part of their LNG imports “, a commercial source with an LNG terminal in southern China told S&P Global Commodity Insights.
LNG terminals were still profiting from the sale of long-term LNG cargoes in the domestic market, but the resale of LNG cargoes in the international market was found to be more profitable, the source said.
Maybe AIG and ABC would like us to buy back our own gas at another healthy profit margin. Ironically, we might get it cheaper from the Chinese than from our own export cartel given that China pays 33 Gj of Australian spot gas while Australia pays $40 Gj. We could save a dollar!
This is clearly CRAZY.
For adults, there are only two fixes for this:
- My preferred solution is to apply a 100% war profit levy on all export sales above pre-war Ukrainian gas and coal prices. This will bring down the local price and also make Australia rich. Energy cartels are not entitled to such an unethical bargain.
- But, I recognize that this will send the entire mining lobby into meltdown and cause an RSPT-wide fight that the Labor Party’s bullet-free zone is clearly not up to.
- So instead reserve enough gas and coal for domestic use to drive down the local price and export the rest, which will be almost everything, with minimal disruption to the profits of the miner and export customers , but cheap prices at your place.
All this tiptoeing around the facts is pathetic. Energy markets have lack. There is no grant or giveaway that fixes it.
What must be done in the national interest must be done.