The AFR is a vile organ these days. Long gone are the times when one could turn to the paper for the most rational view of liberalism. It has been on a one-way slide ever since Murdoch alumnus Michael Stutuchbury guided it into the temple of extremist businessomics.
Two stories in recent days make the point. Every AFR commentary I have read on energy has been the same. Gas cartel propaganda dressed up as analysis. It’s become a right of passage for AFR journos to join the paper’s suicide bombing of Australian energy markets.
The latest loon to walk a vest stuffed with plastique into a room packed with every Australian east of WA is Karen Maley:
The government’s enthusiasm for energy price caps is a clear demonstration that although Australia is a country that claims to believe in markets and the importance of honouring our commitments, we’re not above reneging on previous understandings and imposing non-market solutions when it happens to suit us.
That’s the rub of the argument. Repeated metronomically. The big lie to be made truth by the force of habit. Misrepresented as contrarian when in truth it is ultra-conformist inside the AFR businessomics cult.
Forgotten as usual is that there is no gas market. In its place is market failure. A gas cartel that sits on 90% of east coast reserves, dictates outrageous contract terms, exports volumes explicitly to manage local prices, lied through its teeth to get here, and produces copious propaganda every day to bulwark the position.
The second story is by energy reporter, Angela Macdonald-Smith, who had the pleasure of interviewing MidOcean Energy chief executive De la Rey Venter. He is busy paying $18bn for ORG’s LNG business in complete contradiction with everything argued by Maley and her toilet paper.
Macdonald-Smith tried to goad Venter into condemning an Albanese Government energy fix but he was having none of it:
If you have enough gas in the ground, as is the case here, there is no reason why we cannot take care of both the domestic consumer and continue to honour and service export contracts.
That is the belief we have that government will do what government needs to do in the near term. But we will also work together to fix the structural long-term issue of insufficient supply. I was just catching up on press articles and reading comments from Treasurer [Jim Chalmers] and [Resources] Minister [Madeleine] King, they are very much aware of the risk of unintended consequences that are attached to any set of short-term measures. And therefore also the need to counterbalance for that and subsequently to move on to address the real issue, which is a supply shortfall.
But wouldn’t what is being talked about – a price cap potentially of about $12 a gigajoule – do the opposite?
I don’t know what package of measures they will come up with and I don’t want to speculate on that. We understand why the government feels that it has to intervene, we understand the politics of it, we understand the human need and behind these sentiments, we can only hope that those interventions are as targeted as possible, are short term, and don’t come at the expense of government and industry, customers and the supply side tackling the real issue, which is how do you create a market with stable, reliable and affordable supply.
You don’t solve a shortfall of supply by deepening the shortfall in supply. But there is an interim period that needs measures to get through on prices.
We have every confidence that Australia will remain over the long-term an attractive investment destination for our dollars and for us to sustain investment, not only in APLNG, but also in supplying the domestic market, and that there will be a quality set of regulatory frameworks, energy market design that will allow for us to do that.
For all of the self-aggrandising hogwash about “business” and “leadership” in the AFR, it doesn’t even know it when it walks into the room.
That said, if you really want to be blown up by businessomics claptrap then why go to the copy when you can pull the pin on the original? Nothing can vaporise your brain more completely than Gottiboff at Murdoch:
This week’s national cabinet meeting is one of the most dangerous gatherings of national leaders in recent times. Inexperienced in energy complexities, politicians and public servants could easily plunge the east coast of the nation into chaos, especially as the industrial relations legislation has destroyed business trust in the Albanese government. The first energy plan that was proposed, a price cap, may be rejected on the grounds of state opposition. But those state objections were almost irrelevant: the “cap” was a recipe for chaos.
…Each east coast state is different. We start with NSW. Purely on the basis of cash production costs, and ignoring their enormous capital costs, renewables are the cheapest form of energy. Accordingly, in a price cap regime, as the lowest cash cost source of electricity, renewables will take the first slab of demand – assuming the wind is blowing and the sun is shining.
On the basis of a proposed cap of between $11 and $13 a gigajoule, the next lowest cost level is gas-fired power stations. Unless there is some form of complex quota, gas power stations will therefore run flat out as a baseload operation, creating gas shortages.
Then comes black coal generators which, because of the gas price cap, suddenly become the highest cost power provider. But black coal power generation needs constant output and is extremely expensive and dangerous if it is forced to be the swing producer. It is a recipe for chaos in the generation of power in NSW. Queensland will be affected in a similar way but not as severely. Then comes poor old Victoria and its infamous energy policy, partly based on preserving ALP inner city lower house seats.
Poppycock. The cartel has already delivered chaos: prices at $700MW/h, crashing retailers, the NEM suspended, and 3-4% added to CPI. All of that ignored jazz is why we’re having this discussion. If the gas cap is short-term and the coal cap arrives in due course then all of the above is irrelevant.
More:
Daniel Andrews’ decision not to develop Victoria’s large onshore gas fields which don’t require fracking has worked: there was no green decimation of ALP inner-city seats in the recent election.
Without the Woodside/Exxon “rescue” expenditure, Victoria has the choice of developing its onshore gas or suffering huge shortfalls in about three years’ time, when the next election is due. The inner-city green seat issue remains. Victorians voted against gas development, so can’t complain if they are hit hard by the repercussions of any price cap.
Unproven reserves within the cartel. Even if there, and developed, they will not bring down the price. Gottiboff is paid to pretend otherwise.
The irony of the VIC election was that Dan Andrews was busy crowding out private investment in renewables while Matthew Guy tried to allow private investment in gas. Both should be doing the opposite: starting a state gas company to extract reserves and pressure the cartel.
The truth of it all is this. CEOs are not arguments. Rich people are not right by definition. “Business” is not markets.
Publishing is not greed, it is responsibility.
