There is a reason that Energy Quest gets all of the research from the gas cartel. Today it blasts out complete economic drivel on price controls:
“This kind of policy is more common in third-world countries. Given that most LNG is sold at oil-linked prices, which are generally higher than oil-linked prices, this could require LNG producers to subsidise domestic users. It could also mean that producers are required to sell below cost to domestic buyers,” EnergyQuest chief executive Graeme Bethune said.
“This policy could backfire significantly. It would likely impact on ongoing CSG drilling, with negative implications for east coast domestic gas supply. It could also have international repercussions, given the significant Chinese investment in east coast LNG. There have also been cases where domestic manufacturers with gas contracts at low prices have on-sold their gas to LNG producers.”
60% of world LNG prices are oil-linked and falling fast because the market is flooded with supply with no end in sight:
The entire rationale for oil linkage has collapsed as the LNG market goes global.
As well, gas reservation is used worldwide to anchor local prices. BY EVERY MAJOR PRODUCER. Including WA where the price is one third what it is on Australia’s east coast.
That we will need to use price controls to enforce export net-back prices is a measure only of the strength of the east coast gas cartel. It has nothing whatsoever to do with viability. There is plenty of cheap enough gas to supply local needs at export net-back which is currently $6-7Gj:
There’s plenty of conventional gas yet too, the cash costs for which is nearly zero. The price has only gone up because the gas cartel cornered the market.
Price controls might force the cartel to write down its white elephant LNG investments again, as they are forced to stop selling gas at extortionate prices here. Otherwise, all will be fine.
Bring it on!
