If it wins the upcoming federal election, the Dutton-led Coalition will commit to implementing a gas reservation policy covering Australia’s East Coast.
Under the Coalition’s policy, uncontracted gas sold on the spot market must be reserved for domestic use. The Coalition would force companies to supply the gas domestically by imposing a levy on gas not locked up in long-term contracts that companies export.
This levy would be set at a level that makes it more financially rewarding to sell the gas into the domestic market than ship it offshore.
The Coalition claims that its policy would shift gas equivalent to about 20% of domestic demand from exports to domestic consumers, thereby preventing gas imports and lowering gas and electricity prices.
The Coalition has promised to deliver East Coast gas for under $10 a gigajoule. The counterfactual scenario involves no reservation, the start of LNG imports, and an east coast gas price of $20 per gigajoule.
The Coalition has also promised to invest $1 billion into a Critical Gas Infrastructure Fund to increase gas pipeline and storage capacity.
Extra pipeline capacity and/or storage is vital to enable gas flows to Victoria during the peak winter months when the north-south pipeline operates at capacity.
Shell Australia chair Cecile Wake begrudgingly admitted that the Coalition’s gas reservation policy would drive down prices.
Wake said the policy would “potentially push more supply into the market than there is actual demand … and when that happens, it has the effect of potentially driving prices even lower than the $10 [a gigajoule].”
If that is not a ringing endorsement of the Coalition’s reservation policy, I don’t know what is.
Mark Ogge from the left-leaning Australia Institute has written a report in The New Daily supporting the Coalition’s gas reservation policy. Ogge has also called on Labor to emulate the policy, noting that the majority of Parliament supports the quarantining of gas to meet domestic needs:
It’s hard to overstate the absurdity of Australia’s, until now, bipartisan policy of allowing a handful of global corporations to export 70% of east-coast gas, all the while telling Australians we have a shortage.
The industry uses more gas just running its export terminals than Australians use for electricity or manufacturing—and then price gouges us for our own gas.
Astonishingly, we ship so much gas to Japan it has a surplus. Japan now on-sells gas overseas, while Australia looks to develop import terminals to address an alleged looming “shortfall”.
Labor is trying to dismiss the Coalition’s gas policy as a distraction but, the truth is, it has left Labor out on a limb.
Most of Parliament—from independents and the Greens to Pauline Hanson—support the quarantining of gas to meet domestic needs…
Labor would be advised to get ahead of the Coalition on gas policy. It can’t credibly dismiss what it is doing as hot air.
Sadly, the Albanese government has opposed the Coalition’s gas policy. This means that the East Coast will soon begin importing LNG at an import parity cost of around $20 a gigajoule, double what the Coalition is promising. The increase will also drive electricity prices higher.
The energy lobby has captured Labor. Why else would it oppose reserving Australian gas for Australians?
