Alas, it is all so very predictable.
The East Coast gas cartel is running riot as the European cold winter gives it the excuse.
We are now roughly 600% higher than we should in our gas off-peak season.
As night follows day, especially in Australian energy, wholesale electricity prices are exploding as well.
Prices are more than double last year.
If this persists through summer, and there is nothing to stop it, then two outcomes are certain.
- A summer energy crisis the moment hot weather hits with prices going much higher still resulting in brownouts and the suspension of AEMO rules.
- The Australian Energy Regulator (AER) will hike retail tariffs for 2025/26 by roughly 20% and entirely new price shock will hit just as the energy rebates from the Ukraine War price spikes roll off.
That chart looks like this.
This is a 4-5% CPI shock.
I don’t even know how to describe the corner that Treasurer Jim “chicken” Chalmers has painted himself into.
MYEFO has no choice but extend $3bn in energy rebates to ensure the roll-off never happens. But that won’t end the energy shock any more.
The summer of discontent that is unfolding will mean rebates of another $2-3bn in rebates will be required or another price shock will arrives in the FY2026 despite fiscal support.
Meanwhile, the rebates give the gas cartel a blank cheque to keep hiking prices, sucking billions straight out of the budget.
There is no discussion of this anywhere.
Instead, there is a retarded debate about renewables versus nuclear.
The Coalition’s nuclear energy plan creates “a significant risk” for the stability of the nation’s grid, according to the peak body representing power generators and retailers.
Responding to the Friday release of modelling by Frontier Economics of the Coalition’s scheme to build seven nuclear power plants from the mid-2030s, the Australian Energy Council warned the estimates assumed a slower build out of renewable energy.
The council’s chief executive, Louisa Kinnear, said they were “particularly concerned about the assumed lack of investment in new and replacement generation over the next 10 years”.
“Slowing investment while we assess technologies only available in the future creates a significant risk for the stability of the energy system,” she said.
Frontier Economics, a consultancy, claimed the Coalition’s plan to decarbonise Australia’s main power grid would – at $331bn by 2050 – stand at 44% less than the estimates produced by the Australian Energy Market Operator, thereby saving consumers money. The Albanese government has accepted Aemo’s projections.
“A key issue is the modelling assumes coal remains in the system for longer than asset owners have advised, which could result in reliability issues,” Kinnear said.
This modelling is total garbage. It’s going to cost trillions to build nuclear. We can’t build a road without massive cost blowouts and this will all be done via public investment with a scale of parasitism even MB finds hard to imagine.
How can a Liberal leader back this epochal rape of public finances?
Easy, if your billionaire mates benefit. Gina Rinehart is part-owner of Senex Energy which supplies gas to the East Coast and the cartel. Andrew Forrest is about to launch LNG imports that will become the marginal price setter of East Coast gas.
With that kind of payoff, the fact that there won’t be an economy by the time nuclear is built is a small price to pay.
The inconvenient truth is that neither renewables or nuclear will end the dependence upon gas as the marginal price setter of electricity the majority of the time.
Gas is the peaking power needed to stabilise National Electricity Market surge capacity, more of which will be needed as climate extremes intensify. This is not controversial. The Australian Energy Market Operator (AEMO) openly describes it all the time.
In fact, this was always the plan. The only reason it has gone wrong is the rise of the East Coast gas export cartel.
Without, brigades of conmen have filled the power vacuum to waste trillions on empty non-solutions when the answer takes one second to deliver and delivers a massive economic and budget dividends.
Break the East Coast gas export cartel with domestic reservation and export levies. You still need to do this even if you prefer nuclear!
It’s that or the economy dies of permanent energy inflation shock and your house loses 90% of its value over the next thirty years.
I haven’t see a country rip itself to pieces like this since the collapse of Communism and the dismembering of the USSR by greedy oligarchs.
