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Energy Prices Is No Gas…

Like it or not, we have been caught up in the global boom in gas prices, which have been driven by bad Government policy locally, and the Ukraine Russia conflict, with the latter using gas as a lever of coercion, reducing Nord Stream flows to 20% and forcing up the price of the commodity and for European countries to grab supplied at any cost from anywhere else.

Data from the Australia Energy Regulator highlights how much prices have risen, with prices significantly higher than a few years ago, based on $ per gigajoule.

Last week Natural-gas prices soared in European with the benchmark gas prices rising 12% to 198 euros per megawatt-hour.

there will be a very timely DFA Live show tomorrow night with David Llewlyn-Smith, the Chief Economist at Nucleus Wealth, where we are going to explore these issues and ask what can be done. There is, he says an answer which would reduce energy prices substantially across Australia, it just takes political will.

So today we look at the state of play and some of the levers which might be pulled. The ACCC has today released forecasts showing that the east coast of Australia could face a shortfall of 56 PJ in 2023. At the same time last year, their Gas Inquiry interim report found 2022 could face a 2PJ shortfall.

“Our latest gas report finds that the outlook for the east coast gas market has significantly worsened. To protect energy security on the east coast we are recommending the Resources Minister initiate the first step of the Australian Domestic Gas Security Mechanism (ADGSM),” ACCC Chair Gina Cass-Gottlieb said.

“We are also strongly encouraging LNG exporters to immediately increase their supply into the market.”

The root cause problem is that much of the gas produced in Australia’s east coast is produced by companies that are also LNG exporters. Thus, we are exposed to the worst of the global markets, as LNG (the liquified form of the Gas) is sold internationally. In fact, by value it recently became one of our biggest exports – especially to China.

The ACCC’s report raises concerns about the high level of market concentration, noting that LNG exporters and associates had influence over almost 90 per cent of the proven and probable (2P) reserves in the east coast in 2021 through direct interests, joint ventures and exclusivity arrangements.

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Written by Walk The World

Comments

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  1. Do we actually have a country or does our whole country and all its resources belong to China for the use of their citizens? It seems that it’s like we’re a tomato grower giving the tomato’s to our neighbours while buying our tomato’s to eat from a store at a market price. Why is that and how can it be fixed ?

  2. So Australian governments over the years have shown they're incapable of creating resource contracts without loopholes to protect the population they're supposed to represent as priority one.
    With only 27 million people to look after, you wouldn't think it would be too difficult.

  3. Australian should be at the head of the line when it comes to our Natural Resources, prices payed internationally should have no bearing on the price Australians pay for any of Australia"s Natural resources.

  4. Bit of encouragement if all this bad news is getting the better of you…
    Philippians 4:5
    "5 Let your gentleness be evident to all. The Lord is near. 6 Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. 7 And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus."

  5. Please let us know if a super profits tax on gas exporters with that money given back to consumers would violate trade agreements. If it does it looks like our trade agreements aren't worth having.

  6. I'm putting my money on Uranium stocks for outsized gains. See how they performed in the 1970s energy crisis and also in the 2004-2007 commodities bull. We are in for the mother of all energy bulls because of this energy crisis situation. Imho DYOR

  7. I like that Neurizer is building a fertilizer plant on their own gas field. That's the type of infrastructure we need to be focusing more on.

  8. East coast governments need to get together, purchase a known gas field and finance and build a state owned gas plant solely for domestic supply for the Eastern market, the problem will be solved in 3 or 4 years. They just need the guts to tell the Greens this must be done. At some future time they can always sell it as a going concern to recoup the funds and pay the construction debt.

  9. Trade agreements are just foreign corporate extraction plans denying sovereign control or return to resource nations.Australia is a tax free,near royalties free quarry for multinationals to steal from.The politicians of both major parties who signed these agreements that sold Australians out of their resources and sovereignty should be in jail for the traitors they are.Good on Russia for not allowing the West to steal their oil and gas and spending it on their own infrastructure and peoples well being.Australia is losers false paradise.

  10. all flavours of the Westminster clownshow have no plan but repeating the same failure of logic that predates the GFC.

    Let the half-brain sheep all out compete each other to be the banks biggest debtslaves just so our Westminster clownshow can feed their offspring to Chinese machine turrets.

    covid only exposed all the shortcomings of generations of flawed politico economic presumption.

  11. Successive NSW Governments preventing CSG drilling is a significant contributing problem to the lack of energy security. Blame the left on both the Labor and LNP parties for this debacle, not the Ukraine conflict.

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