Check out the below chart of international and Australian gas prices, published in The AFR:
Because of its domestic gas reservation policy, Western Australian gas users are enjoying the lowest prices in the OECD. By contrast, East Coast Australian gas users, where there is no reservation policy, are stuck paying among the highest prices in the world.
Even China, which receives over 70% of East Coast gas exports, typically pays less than Australian users of that same gas on the East Coast.
Moreover, because gas is the key marginal price setter for electricity, Western Australians also enjoy the cheapest electricity in the OECD, whereas users on the East Coast are stuck paying high electricity prices:
WA electricity prices are also much lower than in the National Electricity Market on the east coast, averaging $64 a megawatt-hour, while NEM prices were more than four times higher at an unprecedented $284/MWh. The NEM average was more than triple the average of the June quarter last year, even including several weeks when wholesale electricity and gas prices were capped by the Australian Energy Market Operator…
“With energy prices at eye-watering levels around the world, we believe that Western Australia now has the lowest gas prices in the OECD,” EnergyQuest said.
“Western Australia is a low-energy price paradise”…
Previous criticisms of the policies – including that it could deter investment in new gas supply and push up electricity prices by prioritising supply security over efficiency – do not appear to have been borne out by experience in Western Australia, a market that is transitioning to low-carbon power.
How an energy superpower like East Coast Australia could charge its own citizens some of the highest gas and electricity prices on the planet is one of the greatest policy failures of our time.
This failure could be overcome by copying the Western Australian government and implementing a domestic gas reservation requirement, or better yet, combining it with super profits taxes.
Sadly, the coward Albanese Government is refusing to move on either, despite Labor being responsible for failing to implement East Coast gas reservation when it approved the Queensland Curtis Island LNG export trains under the Rudd/Gillard Government.
Treasurer Jim Chalmers on Friday also ruled out implementing a mining super profits tax, despite such policies working wonders in places like Norway, which has accumulated a sovereign wealth fund worth trillions on the back of super profits taxes:
Treasurer Jim Chalmers has ruled out imposing a new tax on high mining profits to better spread the resources boom to workers, after economist Ross Garnaut proposed the shake-up at the Jobs and Skills Summit…
Professor Garnaut said high commodity prices should be driving budget surpluses, instead of “eye watering” levels of “peacetime record highs of public debt” after massive stimulus spending during the pandemic…
“A significant part of the increase in the profit share in recent years is in mining”…
“Unlike Western Europe and north-east Asia, Australia as a geographic entity has higher terms of trade when gas and coal prices rise”…
“But under current policies, average Australians are poorer.
“We are kidding ourselves if we think no deep wounds will be left in our polity from high coal and gas and therefore electricity prices bringing record profits for companies, and substantially lower living standards to most Australians” [Garnaut said]…
A Labor source said Dr Chalmers was still “scarred” from the failed “super profits” mining tax in 2010 when he was a senior adviser to then treasurer Wayne Swan, and that he did not want to revisit the idea…
“We don’t have a policy for a mining tax,” [Chalmers] said on ABC Radio National…
“We’re not proposing to go down that path.”
The weekend news that Russia has now cut Nord Stream gas flows to Europe completely means international prices will take off again. As we know, one LNG export terminal has been idled in Australia for the past month for maintenance but resumed operations yesterday. These two developments mean the gas cartel will immediately pressure the local gas price higher again. Without intervention, above $100Gj and disaster.
Meet new Labor: the protectors of capital and the enemies of working Australians.
