New analysis shows Liquified Natural Gas (LNG) producers reaped up to $40 billion of windfall profits in FY 2021-22 thanks to soaring global gas prices due to the war in Ukraine.
The research comes following a damning report from the ACCC into the gas industry around price-fixing and subsequent condemnation of cartel-like behaviour on the east coast gas market.
A windfall profits tax on LNG exports is supported by growing number of leading economists and leaders including former Treasury Secretary Dr Ken Henry, Nobel Prize winning economist Joseph Stiglitz and Atlassian founder Mike Cannon Brooks, among others.
- LNG producers in Australia made up to $40 billion of windfall profits in FY 2021-22 thanks to soaring global gas prices due to the war in Ukraine.
- Global energy prices spiked following Russia’s invasion of the Ukraine in late February 2022.
- Prices for Australian liquified natural gas (LNG) exports doubled from an average of AUD$7.5 per gigajoule (GJ) in 2020-21 to AUD$16.2 per GJ in 2021-22.
- The same price is expected to average AUD$19.9 through 2022-23.
- This jump has seen the value of LNG exports from Australia increase from $30.5 billion in 2020-21 to $70.2 billion in 2021-22
- This $40 billion dollar increase occurred with virtually no increase in the cost of production according to the Australian Competition and Consumer Commission (ACCC)
“While households and businesses are facing soaring bills, these companies are essentially profiteering from the war in Ukraine,” said Dr. Richard Denniss Executive Director at the Australia Institute.
“LNG companies are making windfall profits selling the same amount of gas to the same customers with virtually no increase in their costs.
“The Australian people are paying too much for own gas at home and not getting a fair share of the returns from the gas we export overseas.
“A windfall profits tax would help solve the gas domestic supply and extortionate price issues by removing the incentive to export gas in preference to supplying Australian customers.
“A wide and growing range of experts back a windfall profits tax as an economically responsible way for Australians to receive a fair return for the once off exploitation of our gas resources.
“This year alone a windfall profits tax could have funded the Australian Government’s entire $20 billion investment in Rewiring the Nation and still compensated Australian households and businesses for soaring energy bills largely caused by the behaviour of these same LNG companies.
“Many LNG companies pay little if any income tax and get much of the gas for free as it’s not subject to royalties. LNG producers in Australia are overwhelmingly foreign owned, with profits flowing almost entirely overseas.”
The report War Gains: LNG Windfall Profits 2022 is published by leading public policy think-tank the Australia Institute.
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Jake Wishart Senior Media Adviser