Weak-kneed Australian governments are impoverishing the nation

Steve points out the idiocy of the Prime Minister who is tip-toeing to a form of gas reservation to ensure that domestic needs are satisfied before exports.  The tragedy for businesses investing on the basis that they can sell wherever the price is highest compounds the losses the east coast gas exporters are already incurring.

Australia has oodles of gas on both coasts but in the words of an Australian editorial has caved in “to pressures from green groups, rural lobbies and the anti-exploration hysteria of a prominent radio shock jock”. All state jurisdictions but Queensland have severely restrained the exploration and supply of gas and are undermining the nation’s wealth potential.

I have a piece in The Australian this morning that leverages off AGL’s blatant hypocritical claim it has “a plan to get out of coal as smoothly as possible — embracing cleaner, more sustainable sources of energy like solar, wind and hydro”.

As a result of the forced closures of reliable coal plant in South Australia and Victoria, the wholesale ex-generator price of electricity has risen 2-3 fold.  AGL will see its profits increase $3 billion this year – not bad for a firm that struggles to make $1 billion a year.  Other generators also gain, including, sadly, the exotic renewables whose subsidised output is the cause of the price increase as well as the deterioration in reliability.

The flipside is higher prices for consumers – especially commercial businesses some of which face a doubling of their electricity price and where that accounts for 20 per cent of costs this wipes out profits and means the businesses (even Politically Correct BHP) will look to less green pastures for future expansions.

Overall the national wholesale energy cost has been lifted from $7 billion in 2015 to over $22 billion this year

The piece finished with

The only reason Australia is confronting this detrimental economic situation is because of the energy policies being followed, primarily the subsidies to wind. The situation remains retrievable partly by salvaging mothballed plant in Victoria and NSW (South Australia having already destroyed its closed coal generators). We may also see the building of new plant. AGL may have turned its back on fossil fuels but there are dozens of other enterprises around the world and locally that would seek to exploit the profit potential from supplying a market that is overpriced.

And such potential is readily available. The last major coal generation power station built in Australia was Kogan Creek owned by the Queensland government and commissioned in 2007. At that time the power station could operate profitably by selling power at under $45/MWh. The cost, taking into account the preference given renewables, is now said to require $70/MWh, though this seems excessive as inflation since 2007 has been only 24 per cent. What is certain is that the price of coal-based electricity is a fraction of that available from renewable sources — which costs $110/MWh — and well below that available from gas plant.

To maintain living standards, Australia needs to prevent premature closures of low-cost electricity generators and to build new ones that take advantage of our abundant coal supplies and the expertise of the workforce. The only thing stopping this is government regulations forcing subsidies to renewable energy.

 

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43 Responses to Weak-kneed Australian governments are impoverishing the nation

  1. stackja

    MT is the PM. He is the problem.

  2. AGL’s latest televised propaganda finishes with the line, “Are you with us?”

    I cancelled my account.

  3. lotocoti

    SBS was risking their social licence by running a Mineral Council TVC on high rotation last night.

  4. Tom

    Thanks for the post, Alan.

    Australia has oodles of gas on both coasts but in the words of an Australian editorial has caved in “to pressures from green groups, rural lobbies and the anti-exploration hysteria of a prominent radio shock jock”.

    I think it’s time for an update on how much GDP per annum Alan Jones is costing this country. He’s not just an idiot — he’s a fucking criminal taking food out of the mouths of the Australian poor and forcing them to live without heating in winter and air-conditioning in summer.

  5. A Lurker

    All Australian households should be able to access affordable, reliable, and plentiful energy supplies – whether that energy comes from gas or electricity from coal-fired power stations. At the same time, we should be able to export coal and gas without hindrance. Common sense really.

    That being said, Australia needs to possess energy independence and energy security. If we do not possess that, then we have a problem.

  6. incoherent rambler

    Abolish all energy taxes.

  7. john constantine

    The Oligarchs are the NationState, everybody else are Stateless proles.

    Policies that enrich the oligarchs by redistributing wealth from the proles may well be the last industry left undynamited in poor bastard Australia.

  8. lotocoti

    He’s not just an idiot

    Whenever he dials the anti CSG hysteria up to eleven, someone I know rather well (with some small knowledge on the subject*) just smiles as she chases another kitten into the insinkerator.
    *Three years editing one of those 16 kilogram Environmental Impact Studies he finds unreadable.

  9. john constantine

    If their left manage to deindustrialise those operations that use large amounts of industrial gas, this will free up supplies for our services economy.

    Win/Win, the left continue deindustrialising to dewesternise and the Oligarchs trouser the cash from the operation.

  10. john constantine

    Australia is only months away from the gas price squeeze actually shutting down agricultural processing plants.

    Low margins for meatworks and dairy plants [we are told] will mean that electricity and gas rises will require shutdowns and closures.

    Ex-workers will then become clients of the governments welfare services empire.

  11. thefrolickingmole

    I see the grand high poobahs and wise men of the East have decided their answer to gas shortages there is to suck gas from Western Australia via a new pipeline from offshore.

    The mental feebleness of this defies belief.
    Lock up your own gas with both onshore and offshore bans for exploration, suck the GST from WA then also want to use gas available in your own back yard?

    Fuckwits the lot of them.

  12. Old School Conservative

    Any investigation done by the press into potential breach of contract outcomes?
    Will exporters such as Santos have to divert gas from existing export customers to local customers? I assume so.

  13. Roger

    What can one say but we are governed by idiots?

  14. OldOzzie

    Adam
    #2365014, posted on April 27, 2017 at 7:50 am
    AGL’s latest televised propaganda finishes with the line, “Are you with us?”

    I cancelled my account.

    Same with me, my Gas account (Large) is with AGL, but after that AGL Propaganda, I will be cancelling my AGL Gas Account.

    Any suggestions from Cat’s as to a good competitive Supplier of Gas in NSW?

    I am now continually pointing out to my kids and their Green Leaning Millennial Friends, that they are screwing their own, and their children’s future for Australia, as with the dramatic price increase in Electricity and Gas (besides hitting their own pockets) will drive Industry out of Australia and ruin their Future.

    Lord Waffles of Wentworth and Lady Lucy Turdbull and their Grattan Institute are a major part of Australia’s Problem.

    As for the Liberals, a totally lost cause.

  15. OldOzzie

    Adversity is good for the soul
    Posted on 11:31 pm, April 22, 2017 by Steve Kates
    Read this if you can bear it: David Archibald’s WA election diary. This is how it starts:

    David Archibald’s WA election diary nailed it when he said in that Diary

    “What has happened in WA is that ministers have had no interest in the running of their departments so the green/Labor-oriented public servants run amok.”

    You can apply the same to any State/Territory Government, and from personal experience, especially NSW Liberals.

  16. The laughable stupidity of The Turnbull Coalition Team is never more evident than in Malcolm’s socialist ramblings today.
    * “tough new restrictions on the country’s gas producers”
    * “sweeping powers to block exports”
    * “gas companies needed a “social­ licence” to operate,”
    * “excessive exports.”

    Menzies’ concept of a broad church surely wasn’t meant to include communist dictators like Trumble.

  17. struth

    I don’t know if it is so much as week kneed as to not giving a rat’s bum, inherent corruption, and everything inherent with career politicians not caring to rock the U.N boat, that is the cause.

    Try forcing a pay cut on them.
    See how week kneed they are then.
    They are corrupt moral vacuums, in my book, pure criminals and traitors.
    “Week kneed” lets them off way too easy.

    We need only look at our housing affordability to see where this is going.
    Australia is in deep shit, and anyone that thinks this will be resolved in the positive, confuses optimism with insanity.

  18. struth

    I should always have a coffee before I comment.

    Week………………………really?

    Making weak excuses this week.

  19. incoherent rambler

    Speaking from the bottom of very deep hole (the digging was started by John Howard) Mick Trumble announces a ban on foreign shovels in a futile attempt to stop the hole getting any deeper.

  20. Defender of the faith

    Moran is very confusing. If your first principle is sustainable (companies should be free to pursue the highest price) then kindly explain how the so called export net back price charged in the Australian contract market is in fact well above the actual landed lng price in Asia yet attracts no change in domestic supply? Secondly, why do you not laud AGL’s profitability?
    In fact this is a complex issue that goes to the underlying gas market in Australia and its poor management over time. It is exacerbated by Santos having very badly mis judged its csg production esp in Queensland, causing the diversion of massive volumes of conventional gas to make sure the huge and potentially redundant lng plant has feed.

  21. incoherent rambler

    Let’s be positive and look at the solution. i.e. government removes ALL additional taxes and restrictions on energy production (e.g. RETs, excise, gas exploration …).

    Latrobe valley generators would be able sell coal fired electricity into an overpriced market of 30c to 50c per kwh at a production cost 3c to 4c per kwh. Yes, they would start building generation facilities, now, if assured that government would not re-introduce the current regulatory regime. No problem, it would only take seven or eight years (at best).

    Freeing up the gas market would provide lesser benefits but in a shorter time frame (three to five years).

    The short term winners? Gas drillers and gas generation and the end consumer.
    The long term winners? Coal electricity generators, gas drillers, gas exporters and gas generation and the end consumer.

    The losers? Wind/solar generators would not be able to sell their product. Union super funds heavily invested in wind would take a huge hit.

  22. hzhousewife

    Australia is only months away from the gas price squeeze actually shutting down agricultural processing plants.

    Low margins for meatworks and dairy plants [we are told] will mean that electricity and gas rises will require shutdowns and closures.

    Ex-workers will then become clients of the governments welfare services empire.

    And all those people will then magically vote Labor?

  23. OneWorldGovernment

    Defender of the faith
    #2365083, posted on April 27, 2017 at 8:58 am

    Moran is very confusing.

    Personally I can’t wait until all coal exports are stopped and coal fired generation is completely eliminated.

  24. Motelier

    You can apply the same to any State/Territory Government, and from personal experience, especially NSW

    People in positions of power that make the decisions should lead by example.

    When load shedding has to occur, the electorates of those politicians that voted to close down a power station or block a new power station being built should be the first ones on the list to be switched off and last to be switched on when the power emergency is over.

    Take it to the next step. Turn off their gas supply at the tap just so they can prove they are holier than you.

    I challenged a greenie to go fully off the grid last year with no generator backup. You can guess the response.

  25. candy

    This coal is evil theme has certainly taken off around the world.

    I can’t relate to it, never felt threatened by pollution or emissions or anything like that. Walk outside here in Brisbane and it’s green grass and blue sky and fresh air. I just can’t understand this aversion to a fine resource that could solve the energy troubles ahead.

  26. Siltstone

    Adam 07:50 and Old Ozzie 08:38
    Re AGL: “I cancelled my account”

    Me too. Went on-line to one of those energy comparison websites, picked a (cheaper) competitor, went on-line with the new mob and signed up. Took 5 minutes. Answering AGL’s “are you with us?” question in a missive to the subsidy-addicted AGL crowd will take less than a minute.

  27. Louis

    Australia

    The most abundant available land of any country in the world and yet we have the highest house prices in the world.

    One of the most resource rich countries in the world and yet we have some of the highest electricity, water and gas prices in the world.

    Add to this the problem of governments (local, State and federal) who instantly become addicted to the high revenues this generates for them.

  28. Faye

    As a business owner years back, I changed telcos for a better deal. The new telco never gave me the discounts they said they would, so I started shaving their bills of the discounts and that is what I paid.

    With everybody now paying extortionate prices for their electricity because of damaging decisions by governments, why can’t we hit back by joining as a bloc (they can’t jail everybody) and pay only for our electricity use LESS the “criminal” add-ons.

    Our bill has Usage (c/kWh) and Supply (c/Day) so it is hard to know by what percentage the add-ons are in these Charges but an overall discount could be worked out. If we all did it, this would be the way to bring down the whole green energy charade.

  29. Louis

    Faye

    Because unlike when a business or the government owe you money, they can have your non-payment recorded as to affect your credit rating without ever having to go to court to prove/recover the debt.

  30. Tintarella di Luna

    News at 11.30 the YAM Petition stands at 32,547

  31. egg_

    I think it’s time for an update on how much GDP per annum Alan Jones is costing this country. He’s not just an idiot — he’s a fucking criminal taking food out of the mouths of the Australian poor and forcing them to live without heating in winter and air-conditioning in summer.

    NIMBY ‘Pitt St’ farmers, eh?
    Just like the Greenoid head of the AFL averse to nearby windfarms.
    It’s for da Green Economy, I tell ya!

  32. egg_

    Australia

    The most abundant…

    Hence, virtue signalling politicians squander it.
    They are the problem.

  33. struth

    Australia should have been a world super power.

    People wrongly equate a huge population with this.
    If that was the case, India would have gone to the moon, been the super power policeman for the free world, and the US would be stepping over sacred cow shit (and human) in the streets.

    We are quite rightly the dumbest nation on earth.
    Everything we do as a nation proves it.
    More natural resources and space and blessed with basically the same beginning as the US, born from the same Christian British heritage, and look at us.
    Pathetic.
    Even if we were just coating along it would still be pathetic considering the blessing this nation has been given, and the hard work and sacrifice of it’s early generations of nation builders.
    As it is, Venezuela here we come.

  34. Neenee

    Any suggestions from Cat’s as to a good competitive Supplier of Gas in NSW?

    Add to that: Any suggestions as to a good competitive supplier of coal-generated electricity in NSW? Not an option, is it, as all electricity consumers are required to subsidise windmills via the RET.

    Why is it that the gas industry is not required to pay RET levies in the same way that the electricity industry does? Not a suggestion; just an observation.

  35. Steve

    People need to understand there is a significant Communism problem in Australia. The greens and most of the left wing pollies, and certainly even the PM appear to have policies that deliberately undermine capitalism, which is the aim of the Communist parties in any country.

    It it walks like a duck, quacks like a duck…chances are…..

    The other reality is that we actually donbt have 2 parties – we have The Party ( but the pollies on both sides have “left wing” or “right wing” “wrappers” so they look different and people have the illusion of democracy, lest they riot……)
    The globalists have captured both sides of politics – the same agenda, regardless of who is in power, continues…..loss of power generation, impoverishment, loss of industry….its not a fluke, its deliberate. I didnt and wont vote for Hanson, but Hanson scares the “two” party system as she is indepenedent and speaks truth – something the globalists cant stand.

    Trumps win was a game chnager – and the Elite hate him for it. He may yet destroy the NWO in the USA if he is able to all he has promised. In Australia, your average voter is ignorant. People who know need to talk to mates in the pub etc and educate them about what shappeneing. The best thing for Oz right now is an emaciated Liberal and Labor vote, and the People actually havinga say in the country, not globalist pollie puppets. We have one chance now to fix this, otehrwise we will be singing songs to Comrade Lenin ( or Andrews ) soon….

  36. test pattern

    I confidently predicted he would do this last year based on the successful WA gas reservation legislation. It will power the next industrial revolution – downstream processing and chemical industry in Kwinana driven by the lithium boom. Salt domes are great for storage. I have mine. There’s another near the Daly River, smaller. Don’t know who has it.

    Small local and good. http://www.pilotenergy.com.au/ will soon be drilling the Wye Knot

  37. Ray

    I think it’s time for an update on how much GDP per annum Alan Jones is costing this country.

    It is time for a quick reality check. Whilst it is true that if Australia produces more of a particular export commodity, then the value of exports will rise, it is not necessarily the case that GDP will rise.

    A rise in the value of exports can have three different impacts on the Balance of Payments. First, a rise in exports produces a corresponding increase in the Current Account balance which means that the Financial Account surplus will fall. This means an increase in national savings and is a good outcome.

    Second, the rise in the value of exports produces an equal rise in the value of imports. In other words, we consume all the added export revenue. The end result is that net exports remain constant and there will be no change in GDP. Of course, this will be a good outcome since consumption will rise resulting in a higher standard of living, but there will be no GDP impact.

    Third, the rise in exports leads to no change in the Financial Account such that the adjustment will be fully borne by the exchange rate. The resultant appreciation will make imports cheaper and exports more expensive, such that imports will rise and exports will fall to the extent that net exports do not change at all. Once again there is no GDP effect, however, there will be job losses in manufacturing industries and this outcome will be a general negative.

    Of course, the most likely outcome will be a combination of all three of these factors, GDP will rise slightly, consumption will rise slightly and jobs will be lost in other industries. The exact mix will be uncertain and so it will be impossible to say whether the outcome would be positive for the economy or not.

  38. Dr Fred Lenin

    Tell me this comrades ,if your greencommunis allies get you to help deindustrialise Australia where are the alps union mafia owners going to get union members money to steal ? Where is the money for the u,n,communist tithe of 10 percent of energy money collected? Without unions where are you going to get new MP now thst Sand G is on the ones of its ass ? You know we need new ones when the old ones resign to spend more time with their families ,(and take up the bribe job from the ole crony capitalists ) like the krudsters NBN co inventor Conroy .

  39. Thank you Tom for this –
    “I think it’s time for an update on how much GDP per annum Alan Jones is costing this country. He’s not just an idiot — he’s a fucking criminal taking food out of the mouths of the Australian poor and forcing them to live without heating in winter and air-conditioning in summer.”

    Just saw – AGL posts turnaround profit of $325 million
    By business reporter Thuy Ong 9 Feb 2017, 9:56am
    http://www.abc.net.au/news/2017-02-09/agl-posts-statutory-profit-of-325-million/8254450

  40. Alan I'm not Jones

    Somebody who should know passed this on after the Aus still refused to publish it. He would know:

    To : [email protected]

    Re: Robert Gottliebsen – “Blackouts a certainty…”

    Robert Gottliesen skirts the fundamental issue in his analysis of the gas crisis. The crisis stems not from the actions of gas companies. The crisis stems from the lack of moral fortitude of politicians in confronting the body of green ideology prepared to exploit uncertainty, false allegation and to use misleading science, such as with the vilification of fracking, in the pursuit of a purely ideological end. When confronted by extremists waving their green books on the march against Capitalist Roaders and supported by a media exchanging objectivity for controversy, the politicians have cowered behind a morass of regulation designed only to protect themselves.

    If there is a gas crisis nobody including gas customers should be under any illusion that it is anyone but weak politicians and their compliant regulators who are responsible.

    David Johnson
    Founder and former MD
    Metgasco Limited

  41. Defender of the faith

    Struth: I know this can be chicken little heaven. But can I remind you that Australia is on most measures 12th largest economy in the world and with only 25 million citizens is therefore one of the most wealthy. And unlike others we have not created a rentier risk by imposing socialist asset models.
    Of course things can improve. But she ain’t broken by any stretch.

  42. Habib

    And Turnbull is legislating to cover up the failure and idiocy of state governments, and further interfering in an already grossly over-regulated market. Dumb prick makes Christine Milne look like Adam Smith.

  43. Rabz

    I spoke to a resident of the La Trobe Valley today and he and I had a right ol’ natter about what a pack of dishonest destructive imbeciles the greenfilth, labor and the liberals are.

    Inexcusable economic vandalism and treason on one mighty scale. It is almost HOP time.

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