Here’s what the Australian Industry Group said yesterday:
“Weston Energy’s shutdown of gas trading leaves hundreds of businesses in Eastern Australia in uncertainty about their energy bills and is a warning of increased pressure on businesses and households due to high energy prices,” said Innes Willox, Chief Executive of the National Employers’ Association. Ai Group, said today.
“Gas prices in Eastern Australia have surged over the past month, following global gas markets to record highs of $30-40 per gigajoule. Two years ago, the industry thought $10 per gigajoule was alarmingly expensive. Electricity prices have also exploded as global coal prices drive up fuel costs for generators in New South Wales and Queensland. Energy futures have doubled in the past year and are well above the 2017-19 highs for NSW and Queensland. The war in Ukraine is the biggest factor in the game.
“These dramatic market moves create the risk that more energy retailers will be caught in the coming months. Energy users in turn run risks.
“In the short term, it is crucial that the Retailer of Last Resort arrangements work smoothly and quickly. Companies contracting with Weston Energy need to know what is happening and they need to be protected from acute shocks.
“The broader issue is that underlying energy price increases will have a huge impact on businesses and households. The federal government must respond.
“A convincing strategy will strengthen and future-proof both energy supply and demand. The energy status quo has become unsustainably expensive, not to mention the climate imperative. But while the transition to new and renewable energy will help over time, it could easily stall amid stalled global supply chains and community turmoil surrounding new energy megaprojects.
“The coming years look very difficult for energy users. There is an urgent need for the new government to bring energy users, the states, energy regulators, energy suppliers and other stakeholders together to find a way through,” said Mr Willox.
“The war in Ukraine is the biggest factor in the game.” Is the?
Or is catastrophic mismanagement as a result of extreme Dutch disease the most important factor.
The rise in coal and gas costs is not much of a surprise. Things like this happen in markets all the time. I didn’t expect a war in Ukraine, but so what? If you make yourself vulnerable, you get a slap in the face.
The mismanagement in question is the suicidal gas regulatory structure on the East Coast that allows a gas export cartel to manipulate domestic volumes to set the price on anything it wants. At the moment it sends three quarters of the eastern gas volumes to China for $31 Gj, while charging our industry $35 Gj:
Malcolm Turnbull tried to fix it with the Australian Domestic Gas Reservation Policy (ADGSM). It’s designed for exactly the outcome we have today, with the cartel coupling gas at ruinous prices: ruinous for utility bills, inflation, consumption, and industrial capacity. The ADGSM is forcing the cartel to leave more gas here and crash the gas price instead of everything else.
There’s a heap of $1 gas out there. we are just to leave a gigantic, anti-market cartel ships it and pays no tax on the profits.
The ADGSM should be activated immediately and remain active until the local gas price is pushed back to $7Gj.
Honestly just leave it permanently activated.
PS Well done for your effort Senator Patrick, you have done a great job and the Greens have big shoes to fill.
#EMERGENCY #Activate #ADGSM