Al-anwar Newspaper English news in Australia
Mining and extractive industries like oil and gas often say that they are “saving Australia”. So their argument goes, when commodity prices are high, Australia can prosper no matter what is happening elsewhere.
This was always only half of the argument, though, because commodity prices often fall and when they do extractive industries lead Australia down.
But what happens when commodity prices are so high that it is actually doing harm to Australia? And what is the appropriate response when those high prices are being driven by human suffering such as war?
These are the critical question facing the Albanese Government in the first days of office. Australia’s gas and coal miners are imposing economically ruinous international prices upon the local economy owing to the Ukraine war and, if nothing is done soon, then every Australian east of Western Australia is going to get a lot poorer in a hurry.
WA is OK because it has a domestic gas reservation policy so its local price is under $6 gigajoule (Gj).
Australian gas prices are traditionally in the $3Gj range. Yesterday they hit $382Gj for a brief period as the wholesale market failed. We are now seeing the gas regulator fix prices in other states at $40Gj.
These prices are far above the price we charge our export customers for the same gas because the gas export cartel of Shell, Origin, Santos, Woodside and Exxon have sent so much gas overseas that Australia is being starved and gouged.
Gas plays a large role in setting the price of electricity in parts of Australia, particularly in Victoria and South Australia. So these prices are going absolutely bananas as well.
Coal plays a larger role in NSW and Queensland but coal and gas are interchangeable in the stationary power fuels market so track one another’s prices. Coal is traditionally $100 per tonne. It is now $500 per tonne.
In short, Australia’s east coast energy markets are in the process of failing and they could crash the economy.
Demand destruction for business
As things stand, gas bills could rise anywhere from 500 to 1000 per cent. This would wipe out what remains of Australian manufacturing. Anything above about $7Gj will shrink Australia’s industrial base.
