Australians are currently feeling the effects of world energy prices soaring due to international events and seeing nations abuse what seems to be overwhelming market power.
Around the world, prices have gone soared due to restrictions on Russian energy exports following its war with Ukraine. Saudi Arabia’s oil wealth sees its regime get away with the medieval treatment of women, genocidal wars with their neighbours and murders of journalists abroad. OPEC’s restrictions on oil production in the 1970s are the stuff of economic legend, affecting policy 50 years later.
Conversely, Norway has turned its oil exports into the world’s largest sovereign wealth fund, $1.9 trillion or $350,000 per citizen.
Most Australians would assume that these countries are only able to do such things because they totally dominate the relevant markets, in a manner that Australia does not. After all, Australia doesn’t have anything like that kind of market power, right?
Australia has a bigger share of the export coal market than Saudi Arabia or Russia has of the oil market. We produce more of the world’s copper and nickel than Norway’s share of oil production.
Australia’s share of the production of iron ore, coking coal, lithium and bauxite is single-handedly almost as big as is ALL 13 OPEC COUNTRIES’ dominance of world oil production.
Australia accounts for 21% of all global exports of LNG – almost double the share of oil exports accounted for by Saudi Arabia.
Obviously, Australia should not use its share of world resource markets to invade neighbours or murder critics. But it highlights the missed opportunities by successive Australian governments in a world that needs to limit fossil fuels.
The lack of fair and strong mining tax or enforcement of requirements for local processing and manufacturing has meant far too many of the benefits of our resources have gone overseas into the profits of multinational companies that use creative accounting to avoid paying tax.
The dominance Australia has in lithium production, which is crucial for batteries, also points the way forward for Australia to take a lead role in phasing out fossil fuels. Australia’s dominance in coal has the power to direct world production away from fossil fuels and crucially position itself as the main producer of Lithium and manufacturer of batteries that would not just decarbonise the global economy but provide jobs for Australians and increased revenue for the government.
The resource industry and its foreign owners will not like these choices, but the choices are there for the Australian government to make.