Australia has vast reserves of natural gas, but an artificial shortage is being manipulated by foreign and local corporate monopolies to force up the price of domestic gas and push back against the wide opposition to coal seam gas fracking.
Exports of liquefied natural gas (LNG) from plants in Western Australia (Gorgon, North West Shelf, Ichthys, etc.) and Queensland (Gladstone) are booming, even though global prices are falling.
Massive investments of $200 billion have seen new and expanding plants where the natural gas is chilled and liquefied to be carried by the huge tankers. Most of the construction investment has been written off against taxation by both Labor and Liberal governments, along with any requirement to pay a miserly petroleum resource rent tax.
In contrast, Qatar, which is currently the world’s biggest exporter of natural gas, earns three times as much as Australia from royalties.
It’s the system, and it’s stupid
Companies such as Chevron, Woodside, Santos, Exxon, BHP, Origin, Arrow Energy and Shell have long-term contracts to supply gas to Japan and other Asian countries. Not content with their current reserves and with limited access to coal seam gas, they are now hell-bent on plundering domestic supplies, not only to meet their contractual obligations, but also to impose higher prices on the domestic market through the creation of an artificial shortage.
The capitalist market system sees prices go up whenever there is a shortage of a commodity, in this case, gas. The higher price is then passed on to the consumers at the end of the line, the working people.
While many other countries set aside a generous amount of resources such as oil and gas for domestic use, Australian governments have pandered to the monopolies and allowed them to mine and extract resources with tax concessions and deferred royalties. Only the Western Australian state government has insisted on a gas reserve for local domestic services, while the Gillard federal government rejected the idea outright.
Bruce Robertson, from the Institute for Energy Economics and Financial Analysis, commented, “Australia is unique in its sheer stupidity in allowing companies to exploit our resources and not insist they provide for our domestic market… We are swimming in gas, the idea that we cannot provide for our own population is just a total failure of our energy policy.”
Victoria and New South wales hardest hit
The people of eastern Australia will suffer the most from this failure, as they use three quarters of all domestic household gas in the country. More than ninety percent of Melbourne homes use gas for hot water, heating and cooking, and fifty percent of homes in Sydney.
Gas from the Bass Strait oil fields is being diverted from domestic supplies to the export port in Gladstone, Queensland. Similarly, gas from the Moomba field in South Australia, is now heading north to Queensland, by-passing the traditional market in New South Wales.
Apart from rising costs as domestic gas users are forced to pay higher than international prices, the Australian Energy Market Operator issued a warning that NSW, Victoria and South Australia could suffer actual gas shortages within two years.
Already Victorian manufacturers and processors that use gas for their operations are being offered only one or two year short-term contracts around $20 per gigajoule, in contrast to the longer terms and previous average of $4 per gigajoule. Some will be forced to shut down or be swallowed up by competitors. More workers will be sacrificed on the altar of monopoly capitalism.
Coal seam gas fracking
At the bidding of the gas export monopolies, the Turnbull government has launched a frantic campaign to force the state governments to lift their bans and moratoriums on coal seam gas extraction. It panders to the climate change deniers who disparage solar and wind and other sources of clean, renewable energy.
And, it ignores the fact that the gas giants already sit on massive untapped reserves on land and off-shore, and that any so-called “shortage” is contrived and manipulated.
It also ignores the widespread community opposition to the whole idea of fracking and the devastation of water catchments, farming land and wildlife that follows. The Australian people have time and again registered their opposition to fracking and will certainly mobilise once more to defeat Turnbull’s plans.
Nationalise the power industry!
Critical resources like oil, gas, coal and water and the associated infrastructure such as refineries, mines, ports and pipelines, should be owned and controlled by the people, not these greedy foreign and local monopolies.
Only then can industries such as gas be managed for the benefit of the people, with regulated pricing and export controls. Only then can the people make decisions on the phasing out of fossil fuels for energy and re-build manufacturing and other industries on a clean and sustainable basis.
This just isn’t going to happen under the current system of imperialism/capitalism. Revolutionary change is what is called for – as the gas farce demonstrates, the contradiction between monopoly capitalism and the working people is sharper than ever.