Opinion: With their announcement this week of subsidies for a major new gas plant in the Hunter Valley, Prime Minister Scott Morrison and Energy Minister Angus Taylor have made it clear: whatever the roadmap, there’s only one destination – gas
With their announcement this week of subsidies for a major new gas plant in the Hunter Valley, Prime Minister Scott Morrison and Energy Minister Angus Taylor have made it clear: whatever the roadmap, there’s only one destination – gas.
Globally, gas prices are at unsustainably low levels. Gas companies simply cannot make money at these prices and are going broke. Yet Australians are paying way too much for their own gas. That's because a handful of companies on the east coast controls the price and they fix it at levels above international parity pricing.Simple, the government tells us. Increase the supply of gas and the price will come down. If only it were that easy.
The gas industry around the world is in dire straits. A global oil and gas glut, brought about by building too many LNG plants and over-expanding gas field capacity, was compounded by a drop in demand due to the coronavirus pandemic, combined with a vicious price war between Saudi, Russian and US oil and gas producers. Global gas prices went into freefall and the industry entered a long-term slump.Gas companies around the world are declaring bankruptcy and major projects are being shelved.
Gas in Australia doesn’t adhere – as Angus Taylor suggests it will - to the normal economic rules of more supply equalling lower prices. Gas production tripled on the east coast of Australia following the opening of the three export plants at Gladstone in 2014. Prices also tripled. Essentially we pay more than our customers in Japan do for Australian-sourced gas.
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