Devil in the detail in the Govt gas price cap, page-52

Just thinking about why WDS rose yesterday when east coast producers fell.

WDS loses because the price cap to east coast gas applies to Bass Strait gas. However, WDS would have been much worse off if this had been done as an excess profits tax (one of the options) that would have applied to all its profits (including those from WA).

I suspect the Government feared another campaign against a mining tax, but thinks it can handle a temporary price cap and reasonable prices after that. I hope the latter at least will not survive.

The rally in WDS shares after falling $5 in several weeks is thus because the worst option for WDS is not on the table anymore. We are better off than the other east coast producers because we have assets elsewhere.