The below is for everyone to share and IMHO it is spelling out...

The below is for everyone to share and IMHO it is spelling out what could happen with our Country and our State if someone will not grab the reins asap and try to stop the horse from bolting.

Cheers to all and Dyor!!

Buddy134




The east coast gas crisis


Monday, 27 July 2015



POLITICS and energy are one of the world’s better examples of trying to mix oil and water but as Slugcatcher was last week considering the state of Australia’s gas market it became fairly obvious that it will not be long before there is a return of political interference.





The problem is not national because some parts of the country have got their energy mix into reasonable order. Western Australia and the Northern Territory will probably not be involved in what’s likely to happen.


But along the east coast – where most Australians live – there is a crisis brewing caused by a series of appallingly short-sighted political decisions such as banning coal seam gas projects in New South Wales, banning fraccing, and failing to encourage gas exploration in central Australia.

Most people working in the oil and gas industry have been somewhat amused by the short-sighted nature of these political events, which also include opposing the development of coal-fired power stations and hoping that renewable energy sources, such as wind and solar, will provide all the energy the country needs in the future.

The best way to describe the renewables plan is to compare it with a dream that lacks any financial credibility – as Germany is discovering with the spectacular collapse of its wind and solar program that has forced up energy prices and encouraged big manufacturers to export entire factories.

What you see in Germany today is what will soon be happening in the manufacturing heartland, what’s left of it, in the outlying suburbs of Sydney, Melbourne, Brisbane and Adelaide.

It’s not stretching the point to say that higher gas prices will bring a re-run of the earlier crisis caused by the now-fading iron ore boom with both events driving the local dollar higher, rendering local manufacturers uncompetitive.

It’s one thing to generate resource sector exports, they’re always welcome, but an unbalanced resource development policy which limits the local supply of essential fuel is daft.

The net result of bad policy is what you see today, rising local gas prices and rising gas exports as Queensland’s coal-seam gas industry is turned on and local manufacturers are forced to compete with Asian-based manufacturers for Australian gas.

It is, of course, a blindingly stupid situation to develop given that anyone with half a brain could see it coming as the environmental movement and its friends in government stymied any source of energy that didn’t come with a bright green sticker attached.

Little, if any, thought was given to the cost of green energy because it was seen by true believers as something we had to have for the greater good of the planet.

In a way, what’s happening is bit like that old medical joke about a doctor describing an operation as a success, shame about the patient dying.

Unfortunately, politicians are soon likely to become aware of the crisis they have caused by not encouraging the domestic gas industry – while also discouraging the coal industry and putting their faith in unproven, unreliable and expensive renewables that will require perpetual taxpayer subsidies to stay in business.

If any of this was new, or was having an immediate effect today, there would be shouting from the roof tops.

Unfortunately for everyone what’s happening can be called a “slow burn” because it’s a crisis that is creeping but will arrive with a bang sometime in the next 12 to 24 months.

If the doctor with a dead patient didn’t deliver the message then consider the grim joke about a businessman who was asked how he went broke: “Slowly,” he said. “Then suddenly.”

The reason The Slug is revisiting a topic familiar to his reader, and well reported by EnergyNews last Friday, is that one of Australia’s biggest banks has joined the debate by pointing out the gas crisis on the horizon.

ANZ Banking Group headed its analysis this way: “Australia’s gas industry – when markets collide”.

What the ANZ’s commodities research team did was look at how gas export volumes are about to soar, lifting Australia close to the top of the global LNG export industry, while wholesale domestic gas prices along the east coast could double over the next two years, and retail gas prices could rise by 33%.

The result – and why politics will rear its ugly head is contained in these two paragraphs from the ANZ research:

“A range of Australian manufacturers will be impacted (why can’t they say affected?) by the increase in the gas price, especially the chemicals and metal industries, where natural gas use is heavy and the capacity to pass on increases is limited.

“In the absence of mitigation strategies, Australia’s heaviest gas-consuming companies could see their aggregate profitability drop by a fifth and their return on equity halved.”

Unsaid, but political dynamite, is that a 50% fall in investment returns must (as night follows day) trigger job losses, and that’s why politicians are about to be woken from their dreams about a renewable energy future – which we simply cannot afford.