Gas rip-off is a chilling lesson

Vanguard September 2014 p. 2
Bill F.


Multinational domination of Australia’s energy industry is about to deliver a chilling lesson for the people, as the domestic price of gas goes through the roof.

A new liquefied natural gas (LNG) plant is nearing completion on Cutis Island near Gladstone in Queensland (above). Its purpose is to convert coal seam gas to LNG for export to Asian markets, attracting prices more than double Australian domestic levels.

The new facility will be operated by a consortium consisting of Santos (30%), Petronas (27%), Total (27%), and Kogas (15%) using, initially, coal seam gas from fields in Queensland.

The higher export price will impact heavily on the domestic market as gas production and supply contracts come up for periodical renewal by the Australian Energy Regulator.

For example, gas distributor Jemena (owned by Chinese and Singapore government interests) has applied for retail price increases based on the expectation that wholesale prices in the eastern states will rise from $4 a gigajoule to $9 and beyond to match the lucrative export contracts.

Pain for the people

This will have a devastating impact on the Australian people, especially households which are already struggling to meet their bills for gas, water and electricity from utilities once under public ownership but now privatised and handed to foreign monopolies.

Victoria will be heavily hit, as it consumes some 75% of Australian household gas, originally a cheap by-product of the Bass Strait oilfields. In 1998 Victoria’s gas pipelines were linked to NSW and South Australia and the national grid was established, but prices also went up.

Turning down the gas heater and paying higher gas bills are only part of the suffering to come.

Reports already suggest that some gas producers are cutting back gas supply contracts for local consumption and hoarding supplies for export, creating an artificial shortage in the market.

In the longer term, another cruel impact will be the expected loss of manufacturing jobs to Asian countries as companies struggle with dwindling gas supplies and higher prices.

Sue Morphet, Chairperson of Manufacturing Australia says, “It could cost our GDP about $28 billion and 100,000 direct jobs, plus all the indirect jobs for people that service the manufacturing sector.”

Abbott government crawls to US monopolies

In January, Prime Minister Abbott spoke at a function organised by Big Oil – Chevron, BHP Billiton and ConocoPhillips. He boasted how Australia’s resources were up for grabs and how profits came before the national or public interest.

“Australia will soon be the world’s number one exporter of liquefied natural gas… Australia is the world’s largest exporter of black coal and we are the world’s third largest uranium producer…Gas is the last commodity to receive an international price…The reality is that just as we have had an international price for oil for over four decades, gas is now being sold in Australia at a world price.”

Other countries are not so free in handing over their national wealth. The United States, Canada and Egypt all have specific policies that reserve a proportion of gas and other resources for domestic use.

Even Western Australia has a policy that confines at least 15% of all gas produced to that state, and Premier Colin Barnett has suggested this should be a national goal. But Australia needs a bigger vision than that.

National Independence

The production and distribution of gas, like other vital natural resources and sources of energy, should be nationalised and controlled for the benefit of the people and the protection of the environment.

Australia has abundant reserves which can supply low cost household heating and cooking for millions of people, rather than billions of dollars for foreign monopolies. It can immediately replace the coal-fired generation of electricity, and bridge the gap while alternative clean energy technologies take over.

The filthy process of ‘fracking’ for coal seam gas should be outlawed.

The issue for the people is not just prices, not just jobs, not just regulating the profiteers, but asserting our national independence and taking back ownership and control of our resources and our country.