It is not just the Cartel of gas producers that is driving manufactures offshore. The gas transmission system in Australia is woefully unproductive and expensive.
The Gas transmission industry in Australia is dominated by the pipeline company APA Group. They control the bulk of the arteries that make up the onshore gas transmission network.
A question that has repeatedly been raised over the years has been “How is APA Group (Australia’s dominant gas transmission pipe line owner) so profitable?”
APA Group is one of the ASX’s top performing shares. Since listing in 2000 its shares have given its lucky shareholders a return of 1304%. In the vernacular it has been a 13 bagger, increasing in value 13 times its original investment in 15 years.
A truly phenomenal investment.
So how does such an essentially dull business make such spectacular returns?
The answer is relatively simple. It runs unregulated monopolies charging its customers monopoly prices.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
