Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Jumpin’ Jack Flash? It’s ‘bout gas, gas, gas!

By Geoff Carmody - posted Friday, 12 May 2017


Australia has lots of gas. Some is already being extracted, used here and, increasingly, exported. We have more that could be used, if permitted. There's talk we might even become the world's largest gas exporter.

Really? Then why all the hand-wringing about an east coast gas supply shortage?

What's the problem?

Advertisement

The east coast gas market is behaving strangely:

  • The local gas price is soaring (now up to, and beyond, $20 per gigajoule). Yet we are exporting increasing amounts of local gas for only about $10 per gigajoule. On a 'netback' basis (ie, excluding shipping and processing costs for exports), this translates to a domestic price of around $8-$9 per gigajoule, or 40%-45% of the domestic price.
  • Some worry gas supplies in Australia will be diverted to exports so much that they may not be available here at any price (or, at least, at a price consistent with ongoing business viability).

Where's market arbitrage? If local gas prices are high, and export prices are low, why isn't gas supply – both Australian and imported – shifting from overseas demand to meet local demand?

What's forcing exports up despite better local returns (increasing local prices in the process)? What's stopping more imports seeking those same better local returns (and increasing local prices in the process)?

Gas is a major household and business energy input. Quite recently, Australians were encouraged to switch to gas from coal-fired electricity. It was cheaper, with lower greenhouse gas emissions. We did.

Now local gas supply is becoming very expensive or even (some assert) unavailable.

Advertisement

Alternative currently-available base-load energy sources are also less available.

Existing coal power generation is being shut down. New coal investments are limited, shunned by some banks, and under a policy 'sovereign risk' cloud. It's low-cost base-load power, but with low investor interest.

Some, including official sources, express concern about business closures, greatly increased household budget pressures, and a broader chilling effect on Australian economic activity.

  1. Pages:
  2. Page 1
  3. 2
  4. 3
  5. 4
  6. 5
  7. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

16 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

Other articles by this Author

All articles by Geoff Carmody

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 16 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy