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The Golden Age of Gas - and higher prices


NSW households are set to be slugged with an increase of up to $225 a year on their gas bills as of July 1.  Australia is rich in gas. The reason is that gas is being exported, so it means a "shortage" of east coast supplies.

Australia will triple its gas production in the next few years as key gas projects in Queensland ramp up production. Despite production going up, domestic prices are set to increase as well. The Consumer Utility Advocacy Centre's Martin Jones says it is part of the globalisation of the economy.

Electricity bills have more than doubled in some areas of Australia in the past decade. The people working here say when gas goes up too, it will hurt. In Victoria we use a lot of gas, and a lot of people use it and it does get cold. And then to a lesser extent NSW and Queensland, they use less gas and there's less people that do use it. So, “comsumers need to be more efficient”!

Prices for households increased on average by 72% for electricity and 54% for gas in the 10 years to June 2013.

Global gas revolution

The Grattan Institute’s June 2013 report, Getting gas right: Australia’s energy challenge, shows how a rising export industry on the east coast plus ongoing strong exports from Western Australia put Australia at the forefront of the global gas revolution.

Strong Asian demand and high prices are inducing Australian producers to export their gas. That means local consumers will have to pay higher prices. Within the next couple of years, gas prices for households on the east coast, particularly in Victoria, will rise by as much as $170 a year. Large industrial users of gas will come under pressure from equally significant price increases.

Independent Pricing and Regulatory Tribunal (IPART) chairman Dr Peter Boxall says the increases are largely due to rising wholesale gas prices. "The ability to export liquid natural gas is driving a structural change in eastern Australia's wholesale gas market, and increasingly domestic gas prices will be influenced by what is happening in world gas markets," he says.

The decision comes off the back of a recent move by the NSW government to deregulate electricity prices.

Lock the Gate’s national coordinator Phil Laird said IPART’s report confirmed international markets will influence gas prices, rather than supply availability. Mr Laird said expanding CSG operations would not bring prices down. He continued, "The fact is that opening up NSW for CSG drilling will not only lead to massive price hikes in domestic gas but will also harm our best food-producing land and precious water supplies".

With global gas resources likely to last at least 200 years, the International Energy Agency has described the next decade as the ‘golden age of gas’. (not for consumers though- Grattan institute report)

Domestic manufacturers will have to pay more and will become less competitive. Domestic industries will close or downsize due to rising gas prices, and will lose workers. Australian consumers will have less disposable income, and that in turn will lower consumer rates.

The gas exporters are overwhelmingly foreign-owned. They demand local industries compete with Asian customers for Australian gas - our own resource! Electricity, water, and gas costs are all increasing despite government promises we'll all be better off.

Senator Waters, Australian Greens spokesperson for mining said: "The foreign multinationals causing the problem by hoovering up domestic gas for export at record prices are now saying that the solution to household price rises is to mine and frack even more gas, risking even more farmland and water”.

The Greens should be leading the charge to force Governments to support the development of a new type of sustainable economy including development of sustainable energy export industry, and lobbying for the trimming down our massive population growth to match.

Norway - an example

Indebted European nations, and Australia, should look to Norway, which has become one of the wealthiest countries in the world mainly by refusing to spend its huge oil revenues and placing them instead in a sovereign wealth fund. The fund generates money from its ownership of petroleum fields, taxes on oil and gas, and dividends from a 67% stake in Statoil, the country's largest energy company. Norway is the world's second-largest gas exporter and the seventh-largest oil exporter.

Norway has a Current Account Balance that is a world-leader in large part because it still has part ownership (67%) of its petroleum processing industry (Statoil). In contrast, Australia surrenders its resources to mainly foreign entities in exchange for exploration rights plus royalties based on tonnage exported.

Both sides of politics are at the beck and call of the monolithic international mining corporations. Globalisation means that our resources, our land, our sovereignty, our future are all being sold off to the highest bidder. Manufacturing will have to pay more and will become less competitive.

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Comments

Not only gas prices, but fuel prices are set to rise. Treasurer Joe Hockey is reportedly considering raising the excise by up to three cents a litre, or even reinstating indexing of the charge, as part of Tuesday night's federal budget.

Petrol prices since 2001 have jumped over what once was called “the psychological $1-a-litre barrier” and are north of $1.60 in some areas, but the excise remains at 39.14 cents-a-litre. John Howard froze the excise rate in 2001 so he could allow petrol to be included in the goods and services tax and not wear the pain of a double hike for motorists at the bowser.

The Abbott Government has mooted austerity measures in the coming budget, led by a controversial and promise-breaking "deficit levy", a thinly disguised new tax. It is believed a three cent a litre rise in petrol excise would deliver more than a $1 billion to the budget bottom line but would likely be met with outrage from motoring groups.

Australians do pay less for their fuel than many Western nations. However, other Western countries aren't generally as widely spread out as Australia, and our urban areas are continuing to grow, outstripping public transport. It condemns families to further cruel hikes in living costs, and transport. The "growth" fetish of our governments means imposing an increasing consumption of energy and fuels, while costs increase - along with scarcities.

The Liberals in particular, offer little to no policies to reduce growth and inefficient. Almost all initiatives to make living more affordable have involved handouts, which only mask the problem, not treat it.

Society should be seeking to make more efficient use of resources. To travel further using less fuel and time, to produce goods using fewer resources and costs. We are caught in a trap where everything we do, makes our day to day living process more inefficient. Desalination plants mean more energy and infrastruture to deliver each litre of water. Urban densification and growth mean more energy and time spent travelling, as distance increases and average speed descreases (decreasing both due to increased car density and lowering of speed limits). Housing costs have gone up, especially for land, meaning more expense. You can see this pattern from the big (government) to the small (computing). Software uses more and more resources to do the same thing. Modern TV's have a 'standby' mode that increase power consumption while it is off. Road transport becomes more and more expensive as traffic and the network grows.

This is part of a stagnant society. All through history, travel times have decreased, and now they are increasing. Travel time by plane has remained stagnant.

We are told that the modern age is becoming more expensive, but I think government incompetence is the biggest contributor. We simply have no leaders who have a vision for this country beyond putting cushions down as we fall further and further. Any easing comes at a cost, due to the cost of handouts to the taxpayers, and costs in delivering and managing them.

All this means that as costs go up, and production is fixed, standard of living HAS to decline. Yet no major party even suggests they have intention to reverse this.