Energy volcano erupts under hapless Albo

I’ve warned Labor every day for five months. I’ve been nice, nasty, and everything in between. They have taken no notice and now a volcano has erupted directly under the government.

The energy shock is here and it is going to get much worse. From yesterday’s CPI:

The raw data is damning. These are quarterly price rises only:

In point form:

• Sydney has been smashed.
• Melbourne has more regulatory protections to slow the price rises but they will still come. The smaller capitals will follow.
• Perth consumers enjoyed a $400 energy rebate owing to a bulging budget and lowflation born of gas reservation.

But wait, it gets worse. Futures are pointing to electricity bill price rises of 100% and more through 2023, doubling the Budget’s outlook, in part as more coal power plant closures arrive:

This is obviously insane given Australia has an abundance of cheap fuels. When juxtaposed against the normalcy of Perth, as it will be every single quarter, it is neither morally, socially nor politically sustainable. To wit:

In just five months, Chicken Chalmers has set fire to household budgets, injected cost-push inflation throughout the supply side of the economy, and deranged monetary policy.

Albo should have sacked Mad King after her openly corrupt undeal with the Evil Gas Cartel and subsequent junket with the same. Now he has a compromised Treasurer who is still talking nonsense:

Treasurer Jim Chalmers says the energy market interventions being considered by the government include codes of conduct.

This includes prices in the gas market, he said.

Labor is also considering “mechanisms, triggers, caps, other kinds of regulation”.

“I’m not prepared to preempt any of that or narrow down the conversation today. It does involve multiple levels of government, it does involve multiple ministers and so I’d rather leave our options pretty open and the same goes for in some future budget.”

Chalmers said he was not open to being more specific about which of these measures are preferable as any of these measures would require consultation with Labor MPs and other levels of government.

Codes of Conduct? Surely he jests. Then again, Albo himself is beyond stupid:

“We’ve taken action when it comes to securing supply, and you saw that over recent weeks where we announced the agreement for the non-contracted gas to be made available here in Australia,” Albanese told Radio National on Wednesday morning.

“So you’ve already seen the government with our shoulder to the wheel.

“But the first step was to ensure supply. When you ensure supply then you have an impact on price. And we’ll continue to look at further regulatory measures, as the Treasurer flagged yesterday.”

It doesn’t matter how much supply there is if it’s offered by a cartel that won’t lower the price. You have to break the monopolists. Albo also appeared on Sky News to blame the Morrison Government again. This excuse will drain away with every bill shock:

The AWU is livid:

Australia Workers’ Union National secretary Daniel Walton, who last week proposed five interventionist options, including having the Australian Competition and Consumer Commission impose price caps on gas, and making the code of conduct enforceable by the ACCC, said the government needed policy in place by January 1.

This was amid concerns the government was talking about still having discussions into the next calendar year.

“We have to start the conversation immediately, so it comes into effect at the beginning of 2023,” Mr Walton said.

“We are the only gas-producing nation in the world, the largest gas producing nation in the world, that does not have a mechanism in place to protect Australia’s interests.”

Rod Sims is livid:

Former competition watchdog boss Rod Sims says the Albanese government could solve the energy price crisis by threatening gas companies with limits on how much they could export, arguing it would prompt the industry to lower prices for Australian consumers and businesses.

…Sims, an ex-chair of the Australian Competition and Consumer Commission, said the federal government should pressure the owners of the country’s three east coast gas export plants, all based in Queensland, to sell fuel on the local market at a level that met demand and at a price of less than $10 a gigajoule – less than half this year’s spot prices of more than $20.

…Sims said the gas producers had undertaken that the Gladstone export facilities would not affect the domestic price when they started operating in 2014, and Australians paid the highest gas price among exporting nations “by a long way”.

“This is their obligation,” Sims told Guardian Australia.

No firm made that commitment more clearly than Santos. So, it is the one freaking out the most now:

Mr Gallagher slammed the proposals.

He said Santos supported measures to guarantee adequate supply of domestic gas through increased monitoring of the gas market by the ACCC.

“[But] this increasing regulatory burden and threat of intervention will take Australia rapidly down the Argentinian road, doing nothing to increase supply but plenty to scare off investors and drive prices up as gas supply becomes ever more scarce,” he said.

“The only way to support the supply of Australian domestic gas is to let the private sector get on with the job of investing in new gas supply sources like Santos’ [NSW] Narrabri gas project, which is 100 per cent dedicated to the domestic market and desperately needed if the government is serious about reviving Australian manufacturing.

“With over 200 years of gas resources at current production rates, Australia can have that competitive energy advantage, but only if the private sector can develop new gas supplies and get them to market with a supportive, stable regulatory and policy environment.

Ah, the old Argentina excuse. Has Australia had a military coup? No. Has it nationalised industries? No. Does it have cheap energy being siphoned off by a war-profiteering cartel? Yes!

If there are parallels with Argentina today, it is in the sheer arrogance and capture of the government by cartels and robber barons that don’t give a fuck about the national interest. Santos being numero uno.

It is the job of any and every liberal democratic government to corral cartels and oligarchs such as Santos which, I assume, it will eventually be forced to do with a $10Gj price cap for local gas. Maybe! Hopefully! Who knows!

But that is not the end of it. Most damning of Albo’s cowards is that it demonstrably has no idea what is going on. While it has dragged the chain on gas regulation for fear of upsetting miners, allowing an immense income shock to develop for EVERYBODY ELSE, it has failed completely to understand that this is only half of the problem and the other half is looming fast:

Soaring prices for export coal pushed up domestic energy prices in the September quarter, the energy market operator says.

And the looming closure of the Liddell Power Station in New South Wales will lift wholesale costs ahead of next winter.

The Australian Energy Market Operator will release its September quarter dynamics report on Thursday, warning soaring global coal prices flowed into domestic power costs in the period.

September quarter wholesale prices fell only slightly from record highs of the previous period, according to AEMO, with spot prices averaging $216 a megawatt hour – more than three times the price being paid at the same time in 2021, but still 18 per cent lower than the $264/MWh average in the three months to June 30.

While the winter energy crisis was caused by a combination of coal-fired plant failures and lower-than-expected renewable energy feeding into the grid, AEMO says international coal prices played a major role in pushing up September quarter wholesale costs.

Fixing gas will go a long way toward fixing power prices for VIC, TAS and SA. But NSW and QLD are much more dependent upon tradeable black coal and electricity prices will not correct much unless the coal price is also addressed with some form of reservation or export levy:

Only an insanely out-of-touch government would get dragged into a fight with a gas cartel and then discover that the same fight looms with big coal.

In political, policy, and national interest terms, the only effective approach is to address both simultaneously under the banner of a national emergency described and defined by the government.

The erupting energy volcano that is incinerating Albo’s cowards is only clearing its throat for an island-leveling detonation.