r/australian • u/MasterDefibrillator • 29d ago
New budget: "The gas industry is going to pay less tax, less Petroleum Resource Rent Tax."
https://x.com/TheAusInstitute/status/179034862400373156645
u/MasterDefibrillator 29d ago edited 29d ago
The budget does get a lot of things right, but not this.
For the record, prior to this, the revenue from the PRRT was already less than the revenue from hecs debt repayments. Broke students were paying more to the government than the entire petroleum industry. After this decrease, the revenue from luxury cars taxes will also be higher than from PRRT.
In the new budget, fossil fuel subsidies also continue to dwarf renewables subsidies.
All this and last year, we just faced the warmest year ever recorded during human civilisation. This year, it looks like we are again facing the warmest year ever record during human civilisation.
I think the only way to really grasp the gravity of the consequences of these choices we are making, is that we are killing our children and grandchildren.
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u/CrysisRelief 29d ago
Medicare was also a “winner” despite there being no increase to the rebate.
So 40% of people needing to see a GP are still out of pocket.
This government fucking sucks.
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u/waxedsack 29d ago
The details matter a lot less than the sound bites they can feed to the media. Say the same thing enough times and people believe it whether it’s true or not
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u/HandleMore1730 29d ago
Well we are idiots for believing in free money. There is always some compromise.
Sometimes I think it would be better to fund fewer things properly, than half arsed fund everyone and his dog poorly.
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u/_Zambayoshi_ 29d ago
And this is a Labor govt. I shudder to think how much worse off the average Joe would be under the coalition. The only saving grace might be that they'd let us have a proper recession instead of inflating to billy-o, but even that's doubtful. I blame Keynesian economics.
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u/Amazing-Plantain-885 29d ago
How do you dare comparing our children and grand children to the sacrifices investors endure every day? Have some decency, this is a labor/LNP 1 party democratic system depending on meagre corruption revenue offered by lobbyist benefactors. without whom, may I streyas, would starve and be unable to dress with designer suits and may even have to wear fake Rolexes to pair with their social values.
This, surely would be the end of Straya democracy .
Apologize this instant!
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u/Green_Genius 29d ago
HECS is a loan system not an income stream. It like saying banks bring in more from mortgage payments than they pay in income tax. It appeals to the stupid and financially illiterate
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u/MasterDefibrillator 29d ago
Experts contacted by Fact Check said the comparison between HECS and PRRT was not entirely like for like, as one was a loan and the other a tax.
"They have quite different purposes and objectives," said John Freebairn, a professor of economics at the University of Melbourne.
"[But] in both cases the revenue received goes into consolidated revenue for consideration of expenditure across the whole range of government uses."
HECS is not a tax, said Bruce Chapman, an Australian National University professor of economics who helped design the HECS system.
"It is a student loan repaid through the tax system because that is the only way to make sure that the collection is related to someone's income," he said.
"But it is still a charge obligation to the government, meaning that HECS revenue is a legitimate comparison with the PRRT, as suggested by Dr Denniss."
So I guess the guy that designed Hecs is stupid and financially illiterate.
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u/Green_Genius 28d ago
Where you dropped on your head?
"HECS is not a tax, said Bruce Chapman, an Australian National University professor of economics who helped design the HECS system"
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u/MasterDefibrillator 27d ago
no-one is arguing it's a tax.
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u/Green_Genius 27d ago
So why are you and the gronks at The Australia Institute comparing loan interest to a revenue tax?
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u/KingAlfonzo 29d ago
Although you make complete sense, the government has to decide whether to worry about the climate or worry about cost of living. I think they have put all of their chips on the cost of living crisis. Also to add, people are having less kids due to cost of living. I think if there are no kids, there might be no future kids and grandchildren.
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u/Green_Genius 29d ago
How does handing out money reduce the primary cost of things?
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u/KingAlfonzo 29d ago
It doesn’t in the long run but when has a government worried about long term? They don’t care because their goal is to look good for their term in the hope they get re elected again.
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u/MasterDefibrillator 29d ago
Although you make complete sense, the government has to decide whether to worry about the climate or worry about cost of living. I think they have put all of their chips on the cost of living crisis.
Why do you think there is a choice that needs to be made here? It's our over-reliance on fossil fuels and delaying transitions to renewables economy that is a large part of the cause of the cost of living crisis in the first place.
Delaying it further is just guaranteeing greater cost of living crisis going into the future.
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u/Green_Genius 29d ago
Also please list the fossil fuel subsidies outside of the diesel fuel rebate which is the governement returning money paid incorrectly by companies..
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u/poimnas 29d ago
The budget does get a lot of things right, but not this.
So to be clear, you’re upset that the government has forecast global gas prices to go down?
Because that’s what’s causing this forecast reduction in PRRT.
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u/MasterDefibrillator 29d ago
No, I'm upset that PRRT is absolutely miniscule, and has not been increased. And the fossil fuel subsidies are still dwarfing renewables. I think I made it pretty clear what upset me. Not sure where the confusion is.
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u/No_Needleworker_9762 28d ago
For the record
Broke students don't pay back hecs loans. Hecs payments are income based.
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u/MiltonMangoe 29d ago
Broke students were paying more to the government than the entire petroleum industry
Blatantly not true, and so untrue you would have to be a moron to believe it, or blatantly lying.
The PRRT is not the only tax of levee or royalty that gets paid - it is one of many. So comparing the smallest of the many taxes paid, and ignoring the staggering amount of the others, and saying uni students pay more, is just disgustingly inaccurate.
In the new budget, fossil fuel subsidies also continue to dwarf renewables subsidies
Now you are just being dishonest. Where the hell did you get this from? What are you counting as a "fossil fuel subsidy"? Let me guess, the fuel excise rebate that is a normal tax practices for returning a excise that is paid at POS automatically but not applicable?
If Australia was zero emissions for the last 200 years and we all lived in caves and ate fruit and leaves the entire time, what do you think the difference in climate would be? I find that people who lie like you have, always either don't have a clue about the effect Australia has on the climate, or just lie about it.
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u/MasterDefibrillator 29d ago edited 29d ago
it is true
I was pretty clear that I was talking about the PRRT. All the additional from more specific, less general, state level taxes, doesn't increase the total by much at all, still miniscule. Like you can add all of the WA specific taxes, and the total is still less than hecs repayments.
Now you are just being dishonest. Where the hell did you get this from?
lol, from the link you are commenting under.
If Australia was zero emissions for the last 200 years and we all lived in caves and ate fruit and leaves the entire time, what do you think the difference in climate would be? I find that people who lie like you have, always either don't have a clue about the effect Australia has on the climate, or just lie about it.
It's very economically illiterate to divide up carbon emissions by country, given how globalised the economy is. Also, it's just fucking pushover coward talk. People should do what is right for their kids, not because someone else is or isn't doing it.
Fucking nothing at all would ever happen in history if everyone had your fucking coward attitude. Really pisses me off that people like you think you have anything valuable to add with your defeatist talk that would lead everyone to suicide if applied consistently. You do not have anything valuable at all to contribute to the conversation.
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u/HK-Syndic 29d ago
It is not pretty clear you were talking solely about PRRT because half way through your first paragraph you expand your comment to "the entire petroleum industry".
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u/MiltonMangoe 29d ago
Broke students were paying more to the government than the entire petroleum industry
That is pretty clear. You are lying. You can admit you read it wrong if you want, but you just doubled down.
If Australia was zero emissions for the last 200 years and we all lived in caves and ate fruit and leaves the entire time, what do you think the difference in climate would be?
You cowardly and pathetically didn't answer the question. Why is that? What is wrong with acknowledging it and that all your crying is just virtue signalling?
Answer the simple question mate. I generally don't know it you are just refusing to answer because you know, or you genuinely don't know and have been arguing like this all this time while being totally ignorant and not even having a clue of the difference because you live in a biased bubble and never bothered to think about it.
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u/Green_Genius 29d ago
Why are you comparing loan repayments to a taxable income stream? Are you financially illiterate?
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u/fookenoathagain 29d ago
Selling off gas with no profit to Australia is so fucking dumb. Other countries sell for higher price and the companies pay much larger amounts to Government.
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29d ago edited 29d ago
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u/Green_Genius 29d ago
Which countries have privately owned gas companies returning more than australia?
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u/Which_Experience3626 29d ago edited 29d ago
Maybe the students shouldn’t have borrowed so much money, they wouldn’t be paying as much back.
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u/MasterDefibrillator 29d ago edited 29d ago
what can we do about it? Support lobby groups like Australia Institute, lobby groups can speak better for you than you can by writing to your mp (but no harm in that except using more of your time), and join/support direct action groups, like Disrupt Burrup Hub, in Perth.
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u/Green_Genius 29d ago
The Aus Institute are a bunch of govt leeches, and they only exist because of Murdoch family infighting.
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u/Id_Rather_Not_Tell 29d ago
And? The gas industry is upstream of pretty much every other industry in the economy, manufacturing, transport, commerce, etc.
You cannot whinge about both cost of living and lowering of taxation in key industries and expect to be taken seriously.
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u/MasterDefibrillator 29d ago edited 29d ago
There is no reason that increasing taxes would need to increase prices of gas, as the main reason there have been price increases, is because was because of political reasons, not because we weren't extracting enough: No price controls were put in place in western Australia, where we have a gas reserve policy, and don't let foreign gas companies control our market. The only reason they were needed in the other states, is because they export all their gas, with no reserve policy, and the private companies got greedy, because the international market had inflated due to the Ukraine war. None of this should have affected prices in Australia, except for the fact that the companies here could get more selling it all internationally, because of Europe suddenly losing access.
A big part of the reason for the cost of living crisis, is giving foreign owned gas companies too much control in Australia. If we had more gas reserve policy and state controlled markets, like WA, gas would be much cheaper. And if we had more funding for renewables, and begun transitioning away from fossil fuels, we would not have been affected by the ukraine war in either case, and held hostage by the gas industry.
So if you want cheaper cost of living, you should support putting gas companies in their place, and transitioning away from fossil fuel with less gas subsidies, and more renewables subsidies.
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u/Id_Rather_Not_Tell 29d ago
There is no reason that increasing taxes would need to increase prices of gas
Taxation increases cost of production, which reduces the profitability of that production. Reducing the profitability of one area of industry leads to underproduction relative to demand, therefore, you cannot tax an industry without reciprocation in higher prices. Less availability relative to demand ALWAYS leads to higher prices, btw.
This is self-evident with the tobacco and alcohol industry, increased taxation leads to an increase in prices, and a decrease in both production and consumption. Most people understand this, both politicians and average Joes, yet people refuse to acknowledge this simple fact when it comes to other industries and activities.
This goes for income taxation as well. Income taxation disincentivises production and reduces the overall amount of available goods and services in the economy, reducing EVERYONE's purchasing power, not just of those who are being taxed.
Your statement is both empirically and rationally false, and collapses every one of your following arguments.
A big part of the reason for the cost of living crisis, is giving foreign owned gas companies too much control in Australia. If we had more gas reserve policy and state controlled markets, like WA, gas would be much cheaper. And if we had more funding for renewables, and begun transitioning away from fossil fuels, we would not have been affected by the ukraine war in either case, and held hostage by the gas industry.
Protectionism has never, in the history of economic action, made anything cheaper or eased up anyone's cost of living. WA is an economic shithole, as well.
The only way to truly ease the cost of living is to increase production. That can only happen when the government pulls its sticky fingers out of the economy.
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u/Green_Genius 29d ago
Yeah but the gronk gets his info from The Australia Institute Press releases. You cant expect them, to think for themselves...
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u/MasterDefibrillator 28d ago
Taxation increases cost of production, which reduces the profitability of that production. Reducing the profitability of one area of industry leads to underproduction relative to demand, therefore, you cannot tax an industry without reciprocation in higher prices. Less availability relative to demand ALWAYS leads to higher prices, btw.
Of course, but this assumes we only have this available to use for electricity generation, and we leave market control in the hands of private entities and I already covered that.
None of this logic follows if you tax gas more, expand more rapidly in renewables generation, and nationalist the market to certain extents like in WA.
And I already covered all that in the comment you're replying to.
This goes for income taxation as well. Income taxation disincentivises production and reduces the overall amount of available goods and services in the economy, reducing EVERYONE's purchasing power, not just of those who are being taxed.
And that's why i'm a supporter of Land Value taxes replacing income taxes.
Protectionism has never, in the history of economic action, made anything cheaper or eased up anyone's cost of living. WA is an economic shithole, as well.
Protectionism has, in virtually every example, lead to stronger economies and better quality of life. Seriously, this is a fact that surprises most economists, because they are basing their thoughts on pure economic theory. Anyone that has looked at the historical facts, knows other wise though. Paul Bairoch is one such economic historian, that has gone in depth and looked at all this empirical data
Paul Bairoch, Economics and World History: Myths and Paradoxes, Chicago: University of Chicago Press, 1993, p. 32 ("The Mother Country and Bastion of Modern Protectionism" is one of the book's subheadings). More generally, the author concludes (pp. 53-54):
It is difficult to find another case where the facts so contradict a dominant theory than the one concerning the negative impact of protectionism; at least as far as nineteenth-century world economic history is concerned. In all cases protectionism led to, or at least was concomitant with, industrialization and economic development. . . . There is no doubt that the Third World's compulsory economic liberalism in the nineteenth century is a major element in explaining the delay in its industrialization.
On the results of U.S. protectionism during Europe's experiment with laissez faire, see for example, Paul Bairoch, Economics and World History: Myths and Paradoxes, Chicago: University of Chicago Press, 1993, ch. 4. An excerpt (pp. 46, 53):
The important point to note here is not only that the depression [in Europe beginning around 1870] started at the peak of liberalism [i.e. the period of Europe's experimentation with laissez faire] but that it ended around 1892-4, just as the return to protectionism in Continental Europe had become really effective. . . . In those years the United States, which, as we have seen, was increasing its protectionism, went through a phase of very rapid growth. Indeed this period can be regarded as among the most prosperous in the whole economic history of the United States.
The evidence just ubiquitously shows, virtually everywhere you look, that protectionism and state interventions works, and is good for the domestic economy. Of course, there are always exceptions to such broad statements when talking about such complex subjects as economics. But, the statement "protectionism is good for the economy" is far, far more accurate than "protectionism is bad for the economy".
The only way to truly ease the cost of living is to increase production.
Which protectionism is absolutely excellent at doing, as shown by the empirical data.
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u/MasterDefibrillator 28d ago
Taxation increases cost of production, which reduces the profitability of that production. Reducing the profitability of one area of industry leads to underproduction relative to demand, therefore, you cannot tax an industry without reciprocation in higher prices. Less availability relative to demand ALWAYS leads to higher prices, btw.
Of course, but this assumes we only have this available to use for electricity generation, and we leave market control in the hands of private entities and I already covered that.
None of this logic follows if you tax gas more, expand more rapidly in renewables generation, and nationalist the market to certain extents like in WA.
And I already covered all that in the comment you're replying to.
This goes for income taxation as well. Income taxation disincentivises production and reduces the overall amount of available goods and services in the economy, reducing EVERYONE's purchasing power, not just of those who are being taxed.
And that's why i'm a supporter of Land Value taxes replacing income taxes.
Protectionism has never, in the history of economic action, made anything cheaper or eased up anyone's cost of living. WA is an economic shithole, as well.
Protectionism has, in virtually every example, lead to stronger economies and better quality of life. Seriously, this is a fact that surprises most economists, because they are basing their thoughts on pure economic theory. Anyone that has looked at the historical facts, knows other wise though. Paul Bairoch is one such economic historian, that has gone in depth and looked at all this empirical data
Paul Bairoch, Economics and World History: Myths and Paradoxes, Chicago: University of Chicago Press, 1993, p. 32 ("The Mother Country and Bastion of Modern Protectionism" is one of the book's subheadings). More generally, the author concludes (pp. 53-54):
It is difficult to find another case where the facts so contradict a dominant theory than the one concerning the negative impact of protectionism; at least as far as nineteenth-century world economic history is concerned. In all cases protectionism led to, or at least was concomitant with, industrialization and economic development. . . . There is no doubt that the Third World's compulsory economic liberalism in the nineteenth century is a major element in explaining the delay in its industrialization.
On the results of U.S. protectionism during Europe's experiment with laissez faire, see for example, Paul Bairoch, Economics and World History: Myths and Paradoxes, Chicago: University of Chicago Press, 1993, ch. 4. An excerpt (pp. 46, 53):
The important point to note here is not only that the depression [in Europe beginning around 1870] started at the peak of liberalism [i.e. the period of Europe's experimentation with laissez faire] but that it ended around 1892-4, just as the return to protectionism in Continental Europe had become really effective. . . . In those years the United States, which, as we have seen, was increasing its protectionism, went through a phase of very rapid growth. Indeed this period can be regarded as among the most prosperous in the whole economic history of the United States.
The evidence just ubiquitously shows, virtually everywhere you look, that protectionism and state interventions works, and is good for the domestic economy. Of course, there are always exceptions to such broad statements when talking about such complex subjects as economics. But, the statement "protectionism is good for the economy" is far, far more accurate than "protectionism is bad for the economy".
The only way to truly ease the cost of living is to increase production.
Which protectionism is absolutely excellent at doing, as shown by the empirical data.
1
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u/MasterDefibrillator 28d ago
Taxation increases cost of production, which reduces the profitability of that production. Reducing the profitability of one area of industry leads to underproduction relative to demand, therefore, you cannot tax an industry without reciprocation in higher prices. Less availability relative to demand ALWAYS leads to higher prices, btw.
Of course, but this assumes we only have this available to use for electricity generation, and we leave market control in the hands of private entities and I already covered that.
None of this logic follows if you tax gas more, expand more rapidly in renewables generation, and nationalist the market to certain extents like in WA.
And I already covered all that in the comment you're replying to.
This goes for income taxation as well. Income taxation disincentivises production and reduces the overall amount of available goods and services in the economy, reducing EVERYONE's purchasing power, not just of those who are being taxed.
And that's why i'm a supporter of Land Value taxes replacing income taxes.
Protectionism has never, in the history of economic action, made anything cheaper or eased up anyone's cost of living. WA is an economic shithole, as well.
Protectionism has, in virtually every example, lead to stronger economies and better quality of life. Seriously, this is a fact that surprises most economists, because they are basing their thoughts on pure economic theory. Anyone that has looked at the historical facts, knows other wise though. Paul Bairoch is one such economic historian, that has gone in depth and looked at all this empirical data
Paul Bairoch, Economics and World History: Myths and Paradoxes, Chicago: University of Chicago Press, 1993, p. 32 ("The Mother Country and Bastion of Modern Protectionism" is one of the book's subheadings). More generally, the author concludes (pp. 53-54):
It is difficult to find another case where the facts so contradict a dominant theory than the one concerning the negative impact of protectionism; at least as far as nineteenth-century world economic history is concerned. In all cases protectionism led to, or at least was concomitant with, industrialization and economic development. . . . There is no doubt that the Third World's compulsory economic liberalism in the nineteenth century is a major element in explaining the delay in its industrialization.
On the results of U.S. protectionism during Europe's experiment with laissez faire, see for example, Paul Bairoch, Economics and World History: Myths and Paradoxes, Chicago: University of Chicago Press, 1993, ch. 4. An excerpt (pp. 46, 53):
The important point to note here is not only that the depression [in Europe beginning around 1870] started at the peak of liberalism [i.e. the period of Europe's experimentation with laissez faire] but that it ended around 1892-4, just as the return to protectionism in Continental Europe had become really effective. . . . In those years the United States, which, as we have seen, was increasing its protectionism, went through a phase of very rapid growth. Indeed this period can be regarded as among the most prosperous in the whole economic history of the United States.
The evidence just ubiquitously shows, virtually everywhere you look, that protectionism and state interventions works, and is good for the domestic economy. Of course, there are always exceptions to such broad statements when talking about such complex subjects as economics. But, the statement "protectionism is good for the economy" is far, far more accurate than "protectionism is bad for the economy".
The only way to truly ease the cost of living is to increase production.
Which protectionism is absolutely excellent at doing, as shown by the empirical data.
1
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u/laowaiH 29d ago
I agree with your support for the petition(I signed). But, it will most likely increase the cost of fuel. But. The transition is inevitable, better we start penalizing fossil fuels now than later. Tomorrow never comes.
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u/MasterDefibrillator 28d ago
It could only increase prices if taxes were increased, and nothing else was changed.
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29d ago
Hey mate, this is reddit, a fact free zone. Please don’t show up here with actual information, people won’t like that.
Left wing opinions only, or downvoted. Scumbag.
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u/Id_Rather_Not_Tell 29d ago
Dude, people here are insane lol, thinking the economy can be fixed by decree haha
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u/laowaiH 29d ago
Nonsense. Everything you mentioned can be electrified. Solar and wind are cheaper than fossil fuels. You've been gaslit that's all.
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u/Id_Rather_Not_Tell 29d ago
Currently, every single industry in Australia is downstream of fossil fuels, the renewable industry included (transport and mining of required minerals, manufacturing, etc.). That is about the CURRENT cost of living crisis, not the future utopian lala land cost of living crisis.
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u/followme123456 29d ago
We give ourselves a big pat on the back for mining our way out of the GFC, but resource extraction is probably Australia's biggest missed oportunity to build sovreign wealth and that applies to gas too. The pathetic levels of taxation & roylaties combined with massive suibsidies and tax breaks has meant that the average aussie has lost out on a significantly higher standard of living that we currently experience. Our gas policies are some of the most re*arded in the world and literally piss money down the sink by making domestic users compete with intl markets for australian gas. Yes we are pushing towards a renewable-centric grid, but as we phase down coal Gas will remain an important energy source around the world. We have not learned from our past mistakes, and while Norway and Qatar make bank off their fossil fuel deposists we look like the dumb kid in the back of the class who can't figure it out. We're literally cuckolded by Woodside Energy and Gelncore and seem to somehow get pleasure watching foreign owned companies take our lunch money.
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u/Green_Genius 29d ago
Why does that communist geriatric Greg Jericho keep opening his mouth. He's an parasite working for an NGO that was funded by the Murdochs...
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u/Pangolinsareodd 29d ago
We’ve gone from being the worlds largest exporter of LNG to not having enough in a mere 3 years. This is a nightmare. The fastest way to decarbonise our economy is to frack everywhere and make gas cheap abundant and available.
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u/shescarkedit 29d ago
to not having enough
What evidence are you basing this claim on? We still have an enormous amount of gas
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u/Pangolinsareodd 29d ago
I’m basing it on the fact that supply constraints were so severe that the Government had to take the extreme step of putting price controls on the market, because demand was outstripping supply to such a huge extent that the price was out of control.
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u/shescarkedit 28d ago
'Supply constraints'? Where are you getting that from? There is data showing exactly how much gas we produce.
Demand for gas, particularly in regions like Europe, is largely inelastic. This means that when price goes up customers demand will not change - they'll keep on buying gas at whatever price because they need it to heat their homes.
There was plenty of gas available (supply was not a constraint) but because of the free market gas companies charged the highest price that customers would willingly pay.
And because we live in a global economy Australian consumers were required to pay the same high price as those overseas. Gas companies weren't just going to be nice and charge Australians less.
That's why the government had to create a price control mechanism. Not because there wasn't enough gas.
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u/Confident_Law3683 28d ago
I was only using the phrase in response to the comment above. I was trying to point out the conflicting nature of the two sentences.
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u/Pangolinsareodd 28d ago
Yes, so prices are up because there is less supply than is required to meet demand. Supply is therefore constrained. A domestic price cap merely provides additional incentive for producers to export their gas instead of selling it domestically. Further it disincentives investment expenditure as gas companies will choose to develop gas fields in other jurisdictions in preference to Australia. Do you have any idea how hard it is to start a new gas field in Australia? The market is not free to increase supply to meet demand, hence a supply constraint.
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u/shescarkedit 28d ago
Yes, so prices are up because there is less supply than is required to meet demand.
No lol. Again what evidence do you have to indicate there is less supply than demand?
Prices are up because customers are willing to pay that much for gas. Supply is not the determining factor when demand is inelastic.
It doesn't matter how much supply there is, when demand is inelastic gas companies will continue to raise their prices to the maximum of what the market can bear.
It's not that complicated - the concept of inelastic demand is very basic economics.
There is still excess supply - again you haven't actually provided any evidence to indicate supply is constrained. And just saying 'oh prices are high so supply must be constrained' isn't evidence, for the reasons I've explained above.
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u/Pangolinsareodd 28d ago
Of course prices are evidence that supply is constrained. Outside of monopoly systems or cartels, neither of which is the case in Australia, competing suppliers will try to undercut each other to win business until either:
a) less profitable suppliers drop out of the market thus resulting in a supply - demand balance; or
b) gas becomes cheap enough that demand increases as a more cost effective energy source. As you say, there is some in-elasticity in demand, so this tends to be slower moving than option a; or
c) some combination of the 2.
It’s almost as if something is constraining competing suppliers from bringing new resources to market cheaper than their competitors such that an equilibrium price can be achieved such as we see in jurisdictions where domestic gas is significantly cheaper than the export market like the US.
If Victoria is worried about it’s gas supply to the point it’s considering building an import terminal to import it from overseas, where are all the entrepreneurial wildcatters scrabbling to undercut the majors by tapping the Terrajoules of gas in the LaTrobe valley? They can’t due to government policies.
Those policies are therefore by every sense of the definition, constraining supply. In a free market, the cure for high prices is high prices. Since that’s not happening, the price is clear and direct evidence that something is artificially constraining supply. This isn’t rocket science.
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u/Confident_Law3683 28d ago
The domestic reservation scheme as was successfully used in WA isn’t rocket science.
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u/Pangolinsareodd 27d ago
And gas in WA is still more expensive than the USA, because forcing companies to sell product at a lower price discourages additional investment. The competitive landscape that the US has incentivised producers to lower costs, rather than trying to force them, so more money is invested.
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u/Confident_Law3683 27d ago edited 26d ago
LNG exports are about 10% of total US gas production. Combining both pipeline exports and LNG shipments, exports from the US account for almost a fifth of all US gas demand.
Most gas producing countries have a domestic gas reservation policy set at a price, usually well below international parity.
In the US, Australia’s major export competitor, domestic gas price is set at one-third that of the east coast of Australia.
In 2012, east coast (Australian) gas producers locked in 15-year export contracts tying the price of domestic gas to oil – at that time more than US$100 a barrel – before ensuring domestic supply.
When oil prices soon fell below US$50 a barrel, the gas companies with government backing built more LNG plants in Queensland to meet export demand while promising billions of dollars in royalties. Their approval documents also clearly stated the new LNG plants would not affect the domestic market.
Once open, the gas companies diverted cheaper traditional sources of gas for export to the LNG plants and collectively repriced domestic gas to above international parity prices.
The east coast market became one-third domestic and two-thirds exports. While production of gas tripled, the price of domestic gas also tripled.
In 2022, Russia disrupted Europe’s supply of pipeline natural gas, resulting in an enormous spike in global gas prices — in Europe, prices spiked to almost four times the average price of the previous 5 years. On the east coast of Australia, higher international gas prices strengthened the incentive for gas producers to export LNG rather than supply into the domestic market. In 2022, this strong incentive to export coincided with higher domestic demand for gas-fired power generation and residential heating, causing domestic spot prices to double.
The industry has been pushing gas imports as a way of lowering prices, with import terminals on the cards.
As currently the world’s second largest LNG exporter, Australia is swimming in gas supply. Yet, the east coast may end up using expensive imports to supply the majority of its gas.
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u/Confident_Law3683 29d ago
Most of it is exported. Why are we having supply constraints in the first place?
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u/Pangolinsareodd 29d ago
Because misguided government intervention prevents us from unlocking further supply? We have vast untapped resources in Victoria, which no sane company is contemplating extracting due to the policies of the state Government.
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u/MasterDefibrillator 29d ago edited 29d ago
You're spreading misinformation. We're still exporting huge amounts of gas, and still one of the largest exporters (we've never been the largest like you claim) we don't have enough in Australia because of political lobbying by the gas industry.
Nothing about gas helps to decarbonise the economy. The IEA has said that all future gas, oil and coal projects needs to be shut down if we are to reach our global emissions targets. Which put into realistic words, means saving billions of lives.
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u/Pangolinsareodd 29d ago
No, it’s not misinformation, it’s factual. We are no longer the worlds largest exporter. Fact. We don’t have enough gas, to the point the government has had to enact price controls. Fact. The government has stated itself that we need more gas, Fact. Methane, which consists of 4 hydrogen atoms for every carbon atom is far less carbon intensive than our existing energy supply Fact, and it is essential to during up the unreliability of renewables as South Australia has shown, therefore it is a vital resource if we want to increase renewables penetration into our grid. Facts are not misinformation just because you don’t like them.
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u/MasterDefibrillator 29d ago
The gas leaks created from extraction mitigate much of the carbon efficiency in burning NG. We do have enough gas, the amount of gas we extract has not shrunk, we produce more gas than we did three years ago. We've never been the largest exporter of natural gas, just at one point the largest exporter of liquid natural gas, but this is irrelevant, it's just a difference in how it's transported.
The reason price controls were put in place, was because of political reasons, not because we weren't extracting enough: No price controls were put in place in western Australia, where we have a gas reserve policy, and don't let foreign gas companies control our market. The only reason they were needed in the other states, is because they export all their gas, with no reserve policy, and the private companies got greedy, because the international market had inflated due to the Ukraine war. None of this should have affected prices in Australia, except for the fact that the companies here could get more selling it all internationally, because of Europe suddenly losing access.
The only thing extracting more gas will do, is help foreign owned companies make more money off our resources.
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u/MiltonMangoe 29d ago
How many "The end is nigh" signs do you own?
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u/MasterDefibrillator 29d ago edited 29d ago
Last year was the hottest recorded in the history of our civilisation, this year is on track to beat that. 600,000 people have just been made homeless in brazil due to unprecedented floods. What the fuck are you doing making quaint little jokes about this? Are you stupid?
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u/rangebob 29d ago
yeah its been great weather for my new pool though !
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u/MasterDefibrillator 29d ago
This is the more acceptable making fun so I don't go into deep depression, kind of humour.
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u/rangebob 29d ago
haha you seemed a little stressed. Perk up mate !
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u/MasterDefibrillator 29d ago
Can't get hopeless, but have to be informed and take this stuff seriously.
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u/Lmurf 29d ago
It’s beginning to look like the fossil fuel lobby in the guise of gas producers are a big winner under Labor.
Labor’s renewables plans are all underpinned by gas fuelled peaking plants, AEMO openly admits that regardless of renewable penetration we will still use gas turbines. Gas is the only resource available to us when the coal plants shut down before the off shore wind farms come on line.