Like Ebenezer Scrooge visiting the site of his neglected gravestone with the Ghost of Christmas Yet to Come, Australia’s gas industry has realised it has so comprehensively screwed Australians over with its greed that few will mourn its passing.
It’s hard to overstate just how badly gas companies and governments have botched the management of our gas resources. It’s so bad that Australians are paying extortionate prices for a resource we have in abundance, we’re getting few benefits from these higher prices because so few gas companies pay their fair share of taxes, and let’s not forget gas is a potent greenhouse gas that is rapidly warming our planet. There are Bond villains with less damaging plans
The fact is none of the current pain being experienced by households and business was unforeseen. Let’s travel back to the Ghost of Christmas Past, to when wholesale gas prices were $3 to $4 per gigajoule just over a decade ago.
Gas companies cooked up a plan to massively increase profits by starting to export most Australia’s gas instead of selling it relatively cheaply to Australians.
The Australia Institute and other experts warned that wholesale gas prices would likely triple, and would increase our emissions, but governments waved through approvals for massive gas export terminals.
Now, the Ghost of Christmas Present
The plan succeeded beyond the gas industry’s wildest dreams. Australia overtook Qatar as the biggest exporter of LNG within just a few years. New gas fields have been opened and around 80 per cent of gas extracted in Australia now goes to export. Gas companies use more gas running their export terminals than Australia’s entire manufacturing industry. Large sections of Australia’s best farmland and native forests are either pockmarked by or earmarked for fracking.
As predicted, gas prices tripled even before Russia’s invasion of Ukraine and then all the gas companies’ Christmases came at once when war broke out and gas prices exploded to up to $382 per gigajoule (and would have risen higher if the Australian Energy Market Operator had not stepped in to cap prices in mid-2022).
Gas companies are raking in obscene windfall profits, up to $40 billion this year, thanks to their war profiteering.
Australian households and businesses are paying through the nose for a resource we have plenty of, but we are collecting hardly any benefits because we have no windfall profits tax and the Petroleum Resource Rent Tax is basically broken. The Coalition government abolished the most effective emissions reduction policy Australia had when it repealed the carbon price.
Australians across the country are not only paying record prices for energy, they are experiencing the direct impacts of a warmer atmosphere with extreme bushfires, heatwaves, floods and storms. The Commonwealth and state governments are discovering just how costly and complex a mistake it was to listen to the gas industry all those years ago. Successive Labor and Coalition governments ignored all the warnings and, like Jacob Marley’s ghost, they are now dragging around the chains of a cost-of-living crisis they approved years ago.
So, the gas industry is getting a temporary one-year $13 per gigajoule price cap in its Christmas stocking thanks to the Australian government. APPEA has warned about ‘sovereign risk’ threats to investment, but when asked which gas projects would become unviable at the capped price of $13 a gigajoule, Samantha McCulloch, Chair of APPEA could not name a single one.
The price cap may help address prices temporarily, but it makes a greenhouse gas cheaper and does not fix problems the gas industry caused with government approval.
Neither will more gas solve anything. In fact, it will only make things worse. All the cheap gas has already been extracted and exported overseas. What’s left is more expensive and more difficult to extract, causing more environmental damage in the process. Gas will stay expensive; that toothpaste is out of the tube. And gas will always be polluting. The most sensible and long-term solutions now are about getting Australians off it as quickly as possible.
Renewables and batteries are the cheapest forms of new energy to build. The Labor government’s energy package, negotiated and passed with the support of the Greens, will also include funding for an electrification package targeted at low-income people and renters. This is sensible and aligns with Labor’s plans to strengthen and prepare the electricity grid for rapid deployment of renewables, something the former Coalition government did its best to delay.
The Ghost of Christmas Yet To Come
Let’s assume governments take care not to compound their past mistakes by listening to the current gas industry hysteria. Let’s assume Australia’s windfall profits tax – described as an economic ‘no-brainer’ by Nobel Prize-winning economist Professor Joseph Stiglitz – has been implemented, delivering tens of billions of dollars of additional revenue to Commonwealth coffers.
The carbon tax means polluters have been paying some of the costs of the damage they have caused and emissions are coming down each year. The government invested in building the cheapest and cleanest forms of new electricity generation, renewables and batteries, bringing domestic electricity bills way down from the record highs of 2022. Green manufacturing is booming.
Ebony Bennett is Deputy Director of the Australia Institute Twitter: https://twitter.com/ebony_bennett
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