“We need an Intervention”: Desperate Aussie Manufacturers Demand Cheaper Energy

In 2018 Geologist Ian Plimer was asked to identify the mysterious high pressure substance shooting out of the pipe, in a place where the Victorian State Government assured us there are no deposits of natural gas. Source Sky News / The Outsiders

Guest essay by Eric Worrall

Australian manufacturers are demanding cheaper energy to remain globally competitive.

Gas action plan sets up clash over price

Public ownership of new gas pipelines, underwritten gas supply projects and a national gas reservation policy are being considered among measures to try to turn back the clock on east coast gas prices and fuel a manufacturing-led economic recovery.

The controversial proposals from the Andrew Liveris-led manufacturing taskforce would take government involvement in the gas supply sector to a new level in Australia and have set the scene for a renewed clash between manufacturers and gas producers over prices.

But they have also triggered calls from some manufacturers for more immediate action to help restore competitiveness at ailing plants that are struggling with price hikes over the past few years.

“What is missing is more immediate measures, a bridge to this brave new world,” said Stephen Bell, chief executive of basic plastics manufacturer Qenos, which on Wednesday asked staff to opt into a 10 per cent pay cut because of the impact of the COVID-19 pandemic

“We haven’t got 5 to 7 years to wait, so we need an intervention.”

Read more: https://www.afr.com/companies/energy/gas-action-plan-sets-up-clash-over-price-20200528-p54x69

I watched an interview tonight with Stephen Bell of Qenos, the situation is very simple; Aussie manufacturers compete with overseas companies who pay $4-6 / gigajoule of gas. Aussie companies currently pay $20 / gigajoule.

This unsustainable price difference gives overseas manufacturers the freedom to offer their product at prices energy intensive Aussie manufacturers cannot match. This disaster is largely the fault of Aussie state politicians who have imposed gas fracking moratoriums and other anti-business policies.

Aussie manufacturers are clinging on in the hope that someone will listen. But time is running out. If nobody listens, Australia will lose what is left of its energy intensive manufacturing industry.

152 thoughts on ““We need an Intervention”: Desperate Aussie Manufacturers Demand Cheaper Energy

    • We have made various offers to these “manufacturers” a low cost process to manufacture hydrogen by water splitting that has an all in cost of sub A$3.50/GJ for H2.

      All have declined. Their attitude is that east coast gas providers should provide them the methane at A$3.50/GJ because …….. well because. This means that an all in price for hydrogen would still be A$5.50/GJ.

      Screwing the Federal Government and hence the taxpayer is a national sport in Australia.

      Meanwhile we are receiving offers from Chinese manufacturers. Those “nasty” communists are not stupid.

      • Because hydrogen and natural gas are totally interchangeable and they won’t need to redesign all their hardware to run off hydrogen.

        • Hydrogen touted as a fuel is an ecological Ponzi scheme – it takes more energy (from a coal fired power station ?) to split it than you can get out of it.

          But of course if you believe in perpetual motion machines and Unicorns – go for it.

          Commercial Hydrogen is manufactured by steam reforming of Methane – which produces CO2.

          Hydrogen is a dangerous joke.

          • He’s claiming he can crack water at 97% efficiency by regulating the ionization process. Love to read the Patents.

        • No patents, no intention of getting one. The process wil remain a secret. Will be happy with a sovereign customer. The winner gets to take over the hydrogen derived product sector ie, methane, hydrocarbons, ammonia etc. The additional energy is stored in the water itself. No free lunch, it took IR to get it there. I do not supply the IR. So its free for me.

          A patent would result in immediate theft. It is worthless.

          • The additional energy is stored in the water itself.

            Utter bushwah.

            Like any molecule, water has vibrational energy (IR) always in equilibrium with its surroundings. There’s no net excess energy anywhere in that to produce H2.

          • You’re a fraud.

            That’s the exact same language EVERY swindler since the dawn of time has used to defraud their marks. We know the math and the physics around here.

            Get lost. You’ve got nothing.

          • Understand that, so I am reasonably well connected to a government with potential surplus renewable electricity and desperate to make hydrogen work. I’m assuming the project is risk free at your end, so when could you get financial backing to build a full scale system? Might be able to manage 50% of the investment subject to due diligence.

          • PS it would need to be shovel ready to attract post COVID funding, and be able to announced for a marginal electorate before the election later this year.
            PPS It’s generally called “IP” not “IR”, but don’t worry we can help with all that stuff in due course.

      • Australia exports a significant amount of natural gas to Japan. The cost of production is not uncompetitive. Looks like taxes are the issue. In the US, the wholesale price of natural gas is currently $1.80, and runs between this price and $4.00 per GJ. Australia has plenty of natural gas, which is better than burning coal as far as real pollution is concerned. Tell me more about this hydrogen production process – is it electrolysis or a thermal process?

        • Water auto-ionizes in the sun. The amount is minute. However, it wants to ionize under certain conditions. The energy is stored in the water itself. Its a liquid. It was heated by the sun to become a liquid, hence IR (infrared radiation).

          My process regulates the auto-ionization of water. It works equally well with saline water. Salts drop out of solution as the water is dissolved to ions. The other notable properties are that ionized water is compressible and it acts like a di-electric.

          The regulation process takes about 3% more energy. A catalyst and sunlight may mean even this 3% is not necessary to provide. The catalyst would not be sacrificial.

          Once the volume of water is over 1% hydroxide and hydronium ions in aqua solution, electrolysis can be initiated at 0.09V, not 1.23V (ideal) or 1.55V (best commercial PEM).

          The rest is mechanical. The auto-ionization rate is about 7 psecs so ion replacement rates are not an issue. Heat needs to be applied to keep the soltion from freezing. This can be done with a constant water flow. Moving water will not freeze.

          The process works at a 30 litre scale.

          • You’re using ionization to mean dissociation. Water dissociated to hydroxide and hydronium. In pure water, the concentration of each is 0.1 microMolar.

            Solar irradiation does not increase dissociation.

            Ionization means promotion of an electron into the continuum.

            The lowest energy ionization of water is 12.6 electron Volts (eV), equivalent to 100 nanometer (nm) vacuum ultraviolet. Solar radiation of 100 nm wavelength does not reach the terrestrial surface.

            A bit of solar UVA (400 nm, ca 3 eV) and UVB (320 nm, ca. 4 eV) just reach the surface. They cause sunburn and can ionize molecules with very weakly held electrons.

            But not even the highly conjugated molecule perylene has an ionization potential that low (6.96 eV).

            The only molecule that comes close — that I could find — is the diatomic potassium molecule, K2, which has an experimental ionization potential of 4.06 eV.

            As you know, potassium metal detonates when dumped into water. You’ll get no help there.

            I hope you haven’t invested any money in the scheme Geoff, because it’s DOA.

          • More info would be telling way too much. Water is dissociated by my process before it reacts in an electrolyser. IR does increase the rate of dissosiation in the presence of a catalyst. I do not use this process.

          • When you add up all the energy in and out it ballances. The issue is whether you have to pay for the energy in or its provided by the big yellow ball in the sky.

  1. Well I thought that was the plan? Send all profitable industry to China, along with coal and natural gas, and in return, buy windmills and solar panels from China using borrowed money from China.

    • Nice job Rich Davis, The entire plan, intentional or otherwise. Described in one simple sentence. Destroying an economy isn’t a difficult undertaking. Liberals can do it with minimal effort.

      • WUWT readers note Liberals in Australia are conservatives (The Liberal Party); the right (not the left).

        • That’s true Warren, but I’m not sure that Dennis was referring to the Liberal Party of Australia.

          • well Ross gauno is labor buddy and he and a few others are pushing the mad hydrogen to sell to os bigtime right now
            of course Andrews in vic will sell out to obor deals and will jump at the chance to ruin whats left of the economy(not much)
            keeping our gas for US first then sell leftovers for better prices would be good
            we dont NEED to frack
            conventional off n onshore is fine.

        • The Liberal party is hardly conservative anymore. If it was it would come out with a plan to immediately bring back cheap reliable fossil fuel energy – including coal – to manufacturers (and everyone else) , demonstrate to everyone why this is essential, and tell all the ”progressives” to go and get stuffed. Instead they are fence sitters trying to please everyone while actually pleasing no one. Unfortunately the only way out might to give the progressives their run until everyone finally sees how ridiculous their ideas are. By then of course it may very well be too late.

          • Mike,
            No need to let progressives do their worst.
            Just look at the UK going over the cliff.
            That ought to be lesson enough for anyone – although I admit it is impossible to teach GangGreen anything.
            Good luck to all our Aussie mates.

        • WUWT readers note Liberals in Australia aren’t conservatives!!

          They are Socialists, generally from the Arts/Law faculties and have never done a days work in their life. They are pre-selected for their loyalty to the Party, would happily sell their own Grandmother and will not stand and defend the conservative values of their electorate.
          The Australian equivalent of the USA ‘RINO’.

          • In Canada our conservatives are also equivalent to the American Rinos and bend at the knee to Trudeau the great.

    • Rich,
      The conservatives have been screwing Australia by selling off its resources for decades. In the 30’s labour unions protested against selling iron to Japan saying that it would be turned into weapons and used against China and Australia and they were proved right. Later on the liberals again cut down old growth native forests to send to China to be turned in paper and in turn bought it back. The liberals today are still persuing easy strategies to become rich by selling raw materials cheaply rather than building up
      industry in Australia.

        • The left operates under the theory that everything belongs to the state.
          The idea that private individuals are allowed to sell things found or made inside the country to people outside the country, for profit, goes against everything they have been taught.

        • Mark,
          The point is that if your only exports are raw materials and your imports are finished products then overall the country becomes poorer as a result of trade. Plus you destroy your industrial capabilities and any chance of the country becoming richer through innovation and invention.

    • Rich,
      All that, while China uses your coal and natural gas to build the intermittent windmills and solar panels while causing enormous devastation to their people and the environment in the mining and manufacturing of said windmills and solar panels with zero environmental controls or concerns so you and other “pure and green” nations can devastate their industries, economies and workers by buying “renewable” energy so greens can feel good about all the sacrifices other people are making to save the planet.
      Doesn’t make much sense, does it?

  2. Dear Aussies, Come buy our cheap Texas gas. We have so much we burn it at the well sites. We would be glad to sell you all that you want. If your government keeps insisting on taxing gas to unsustainable levels, then move your factory and workers to Texas. We love the Aussies! And your beer – definitely bring your beer. But you will have to embrace American Football to be a real Texan!

    • That’s pretty much what is happening. Asia is also laying out out the welcome mat.

    • Yes our supplier just moved their energy intensive coating line from Melbourne to Alabama.
      Now they’re internationally competitive again.
      Australia was the perfect place to set-up and remain competitive and avoid Asia (particularly China where your trade secrets are stolen almost immediately).
      That advantage has now gone so most energy intensive businesses we know (who can move) are planning to move ASAP.
      CCP now runs Australia’s energy policy surreptitiously.
      Our leading politicians scoff at such suggestions and pour derision on anyone suggesting China is in charge.
      OK now glance at your Gas and electricity bills Australia and repeat after me . . . “I’m a sucker”

    • “Dear Aussies, Come buy our cheap Texas gas. We have so much we burn it at the well sites. We would be glad to sell you all that you want.”
      But how? Aussie gas prices are high because we export to NE Asia, and locals pay what Asia is prepared to pay. If Texas could compete as well in that market, why would they sell more cheaply to Australia?

      “If your government keeps insisting on taxing gas to unsustainable levels”
      It doesn’t. The problem is price competition, not taxation.

      • So that’s what you call restricting supply by banning fracking, eh Nick? Price competition. Riiiiiiiiight, uh.

      • Why would Aussie gas prices be equivalent to the landed export price in Asia after liquefaction and shipping costs? This just proves that Aussies (who own the resource) are getting ripped off by their own Gov’t who are obviously bought and paid for by China. Better learn Mandarin Nick.

        • Nick — I think your Natural Gas pricing problem may be as simple as — Natural Gas isn’t necessarily expensive to produce. But it costs a fair amount to ship by pipeline and even more to ship as LNG. NG prices are low in the central US because the stuff is basically a byproduct of oil production. There’s a glut. It’s cheap.

          Wikipedia assures me that Australia’s NG reserves are large, but are heavily concentrated on the NW coast where the population density is approximately zero people per square anything. The people OTOH are 4000km away in the SE and East. It probably costs about as much to ship LNG from Broome to Sydney as it would to ship it from Broome to Kobe or Shanghai. So the prices are similar.

          I doubt anyone is going to pay for a high capacity transcontinental gas pipeline from Broome to Sydney or Melbourne. And even if they did, NG would still be expensive in the East since the pipeline needs to be paid off. Albeit they’d likely be cheaper than today.

          If that’s the situation, the two answers would be to somehow find lots of cheap NG in Victoria or NSW. Or to move manufacturing that needs cheap NG to the NW coast.

          BTW, I’m fine with fracking. But it’s technology, not magic. It pretty much only works if you have large deposits of (preferably flat lying) tight shales with enough recoverable liquid/gaseous hydrocarbons to pay the (rather impressive) cost of drilling, fracturing, processing and distribution. Not everyplace does. In fact most places don’t. Do you?

          • Don
            “It probably costs about as much to ship LNG from Broome to Sydney as it would to ship it from Broome to Kobe or Shanghai. So the prices are similar.”
            It makes no sense to ship LNG to Sydney from anywhere. The East Coast doesn’t have huge reserves, but it is the main present source of export gas. Victorian gas is currently exported via a pipeline network that takes it through Sydney. Gas shipping costs are not that high, but it can’t make sense to simultaneously ship gas out from East Coast to Asia and in from the US or whatever.

            In fact, there is a pipeline from the NW shelf to Perth, and the WA Government did do what there manufacturers are asking; they reserved a portion of NW production for local supply, so prices in WA are cheaper. But the WA notion of local does not extend to Sydney. Basically anyone in Australia who isn’t protected by such an arrangement pays the world price, with maybe a saving for unneeded shipping. And anyone who would export to Australia is looking to get the world price.

      • Supply constriction through hostile state regulations might have had some effect on the price.

        • Eric: Obama killed coal fired power in the US, declared CO2 a pollutant…but did not shut down coal mining. If coal is bad make mining it illegal. Instead, the coal is mined, transported to California (via CO2), put on a boat and shipped to China (via CO2) where it is ultimately burned creating even more OK w Obama CO2. This parallels the point that some are making here. USA and Australia are afflicted by the same blight.

      • Sorry Nick, I thought the sarcasm would be obvious. It annoys me to no end that we flare so much gas here in Texas – I would rather it be possible to give it away. I understand why we flare it, but it’s still very wasteful.

        And as for my love of Aussies (especially their beer!), that was the truth.

        I am familiar with fracking and the oil industry and do NOT understand people’s objections to it. Except for rare geologic circumstances where waste water disposal at inappropriate pressures (for that injection site) cause small earthquake swarms, it has little impact on the environment – far less than standard oil well drilling of 20 years ago.

          • Aussie football is fantastic. Discovered it years ago on ESPN. I wouldn’t give up American football for it, but it beats soccer hands down.

          • What is a “mark”, as in “Mark of the year”? A catch or reception? Anything more to it than that? I know nothing about Aussie football. Looks like rugby to me.

          • If you catch a ball direct from someone’s foot, without touching ground, that is a mark, and you are then allowed a “free kick”; you can kick the ball without (immediate) interference.
            Jumping high to make that catch is an admired feature of the game.

          • Ok, makes sense. Are there rules to prevent a person attempting a catch from being pushed, tackled, etc., to prevent him from catching the ball? Or is it somewhat of a free-for-all going for the ball?

          • There are general rules saying that you can’t be held or tackled unless you have the ball, and rules against push in the back etc. Bumping is allowed.

            Generally the player going for the ball gets some latitude.

      • Nick, your attempts at diversion are usually much better than this.

        In little Nickies mind, if I can use the term that loosely, there is no connection between taxes and prices.

  3. Just waiting for some partisan conservative to come on here and regurgitate Liberal Party (conservatives in Australia) propaganda about how they’re taking action to reduce energy prices.
    Behind closed doors the Australian Liberal party are furiously working to do the opposite.
    Why you ask? It’s simple . . .
    1. Political donations from communist China Government owned electricity interests in Australia. Yes large chunks now owned by the CCP through major shareholdings in our local assets.
    2. Addicted to the additional GST (VAT) flowing from the high energy prices.
    Stephen Bell is a deluded fool if he thinks an intervention is realistic.
    Move Qenos while you can Stephen because you’re on a hiding to nothing in Australia.

  4. “This disaster is largely the fault of Aussie state politicians who have imposed gas fracking moratoriums and other anti-business policies.”
    The price of gas is simply a result of Australia’s export facilities. Australia is the world’s largest export of LNG. Fracking wouldn’t help; we’d just export that as well. The problem for Aussie manufacturers is that they have to pay the world price.

    That is why what the quote actually asks for is not fracking, but
    “Public ownership of new gas pipelines, underwritten gas supply projects and a national gas reservation policy are being considered “
    “Ownership” so there is some control of where the gas is sent; “reservation” to give locals a share at lower prices. I doubt that is a good idea, but it is what they are demanding.

    • But Nick,
      The lead article says the world price is $4-6 per gigajoule while domestic here is $20. Let us assume these figures are about correct.
      Surely this difference is imposed by the traders. Traders are now largely foreign owned. They have no reason to care for the interests of Australia.
      Australia needs a comprehensive review of ways to regain local ownership/control of all of its substantial businesses, before the members of the review can be loaded up with foreigners whose agenda does not match ours (mine, not sure about yours).
      We have already seen the immense damage done to the Australian economy by dutiful adherance to dubious international agreements like Kyoto and Paris. How stupid does one have to get, to wish for more? Geoff S

      • Geoff,
        “The lead article says the world price is $4-6 per gigajoule while domestic here is $20. Let us assume these figures are about correct.”
        No, it doesn’t say that. It says “Aussie manufacturers compete with overseas companies who pay $4-6 / gigajoule of gas. Aussie companies currently pay $20 / gigajoule.” Companies insulated from the world market can pay less. We can’t.

        I suspect also that that compares $US4 with $AUS20. average spot price (NE Asia) in 2018 was $US9.78/MMBtu ($9.3/GJ).

        Wholesale gas price in Vic was $AUS8-10 per GJ, before the recent crash.

        • Nick
          Re LNG pricing …
          Singapore is not extending contracts for piped gas from Malaysia and Indonesia as they are switching to LNG (via an FSRU) and purchase from open market which, presently, is in the $5/mmbtu range.
          Ukraine just signed a 5 mtpa LNG contract from US for LNG via FSRU.
          Poland, Croatia, Pakistan, India and others are all doing likewise.

          Qatar is having difficulty extending contracts to India and Pakistan at ~$7/mmbtu.
          Turkey, likewise in dealing with Gazprom.

          As I have mentioned on several oil related sites …
          the coming onslaught of ultra cheap US LNG will have profound impacts on political, social, and economic spheres for decades to come.

          • “the coming onslaught of ultra cheap US LNG”
            Yes, there is enough of it to significantly lower the world price, and possibly make our CSG uneconomic.

            That is what it takes to lower the world price. Fracking in Australia would have to be equally productive to have a similar effect. Much of Australia is open to exploration for that, with nothing much to show yet.

    • Nick – It really is the fault of Aussie state politicians who have imposed gas fracking moratoriums etc. The Morrison gevernment and minister Angus Taylor (who really does understand the energy business) really are trying to get things going again.

      Gas exploration and development comes under state government, not federal. State governments have been very obstructive – see https://smallcaps.com.au/fracking-landscape-australia-by-state-and-territory/
      The map in that link is a bit misleading re NSW, because it suggests that NSW allows fracking whereas actual activity, thanks to other repressive rules, is at zero. VIC and TAS are openly at zero.

      Australia exports vast quantities of gas at prices that are way below domestic prices, but fixing the situation isn’t easy, and that’s because gas (unlike oil eg) has local markets and pricing because it can’t be transported between markets without infrastructure.

      The Australian federal government has been putting a lot of pressure on the states, I believe, and the pressure is starting to pay off. Victoria eg has quietly allowed gas drilling again – https://www.abc.net.au/news/2020-03-17/victoria-lifts-ban-on-onshore-gas-exploration-but-bans-fracking/12063196 – but has re-confirmed its ban on fracking.

      Little by little the gas should start to flow again, and hopefully it won’t be too little too late. But the blame for the dreadful situation we are in lies with the states and maybe previous federal governments, but not the Morrison government.

      • “Australia exports vast quantities of gas at prices that are way below domestic prices, but fixing the situation isn’t easy, and that’s because gas (unlike oil eg) has local markets”

        Gas is taken away from the local markets and sent to export. Producers sell to the highest bidder. The pipeline that was built to supply gas to Sydney from Moomba now, at least at times, sends (Victorian) gas the other way, and on to SE Q and export.

        They don’t do that because domestic prices are higher.

        • They do it because they have long term contracts to sell a lot of gas overseas. The contracts aren’t affected by today’s prices.

          • “The contracts aren’t affected by today’s prices.”

            The contracts create today’s prices. They agree to export gas they haven’t got at moderate price; then they have to make up the difference buying on the local market. So the local price rises way above the contract export price.

            But it doesn’t make economic sense. It’s the penalty they pay for foolish contracting. But we all pay it.

    • no we mugs pay MORE than world price for our own prodcut thats sold os far cheapr leaving us short

      and my powerco tells m eprices rising july 1 with NO mention of how much
      they DO tell the pittance of 12c kwh from solar is dropping to 10c
      glad i never bothered with it

  5. Laundered, Green, redistributive change sold to green people… persons at a premium green price.

  6. As staunch a booster for all things American that I am, it breaks my heart to see the sensible, hard working Aussies thrown under the bus by the deranged policies of their more … misguided … fellow citizens. Australia’s largest steel producer Bluescope Steel, is expanding their operations in Ohio due primarily to abundant, cheap energy prices.
    The aluminum smelters in Oz are in great peril of permanently shutting down within the next few years due to unreliable, expensive electricity.
    .
    Port Kembla is on track to import US LNG by next year due, in large part, to the crippling political/social policies of many arms of the Australian government.

    The UK, btw, is not much better when .5 readings on the Richter scale stop frac’ing in their extraordinarily large shale resources. (Readings of over 2 are regularly recorded at stadiums when fans vigorously stomp their feet. Note … a reading of 2 is NOT 4 times higher than .5 as a logarithmic scale is used).

    Australia’s natural mineral resources – wisely employed – should make Australia one of the wealthiest countries on the planet.

    • “Port Kembla is on track to import US LNG by next year due…”

      This is absurd. Australia is the world’s largest exporter of LNG. In Victoria, we have been supplied for about fifty years with natural gas from the nearby Bass Strait. We still are, though it won’t last forever. But now there is a connector pipeline to Sydney, which in turn has a pipeline from which it used to be supplied from Moomba in SA. The same field used to supply SE Qld. But now huge export facilities have been built in SE Qld. Gas flows from Bass Strait, to Sydney (past Port Kembla), then to Moomba, then on to SE Q and to Asia. We all pay the Asian price.

      • Nick, Are you the slightest bit acquainted with the law of supply and demand?

        If supply were allowed to increase through fracking, how do you imagine that would create an equal demand such that supply and demand remain in balance at the same equilibrium price? Increase supply and you will lower the price.

        Remember Obama’s failed prediction that “you can’t drill your way to lower gas prices”?

        • “If supply were allowed to increase through fracking, how do you imagine that would create an equal demand”
          We are leading suppliers to a huge world market. An increase in Australian supply through fracking would make very little difference to world prices. And our fracked supply would simply be sucked up by world demand. It would not go to Australian manufacturers.

          What Eric’s people are asking isn’t fracking. It is protection from world competition for supply.

          • They’re asking for cheaper energy, they don’t really care how it is delivered.

            A gas pipeline from Western Australia, boosted production in the eastern states, and even shifting energy-intensive manufacturing west, are all options under consideration by the expert committee advising the government on how cheap gas will play a key role in Australia’s economic recovery.

            https://www.afr.com/politics/federal/cheap-gas-to-power-recovery-20200519-p54u7z

            There was a scandal a few years ago that international prices charged by exporters were lower than domestic prices. But the reason was gas suppliers were obligated to fulfil futures contracts signed with overseas buyers, but supply was being constricted by hostile state rules on exploration and fracking.

            Add the climate agenda driven shift to gas and closures of cheap coal plants, and a hostile environment which ensures very few new coal plants will be built, and you have a perfect storm of energy price hikes.

          • Eric,
            “But the reason was gas suppliers were obligated to fulfil futures contracts signed with overseas buyers, but supply was being constricted by hostile state rules on exploration and fracking.”

            Exploration and fracking can’t fix a situation where you have signed a contract for gas you can’t deliver in the time of the contract. The answer here is to not promise gas you don’t have.

            “Add the climate agenda driven shift to gas”
            But we’re still the world’s largest exporter.

          • Fracking and exploration friendly laws would increase supply to the point futures contracts could be satisfied with plenty left over for domestic consumers. Or are you going to argue fracking can’t increase supply?

          • Law of Supply and Demand Repealed, film at 11

            What is this magic that causes demand to rise to match supply?

            Do you imagine that fracking would increase supply by 1-2%? What is the US experience?

          • “What Eric’s people are asking isn’t fracking. It is protection from world competition for supply.”

            What’s wrong with that, exactly?

            Why shouldn’t the Australian government protect its own people and industries? Particularly from predatory governments like China who do exactly that for their own industries?

          • “Or are you going to argue fracking can’t increase supply?”

            n the duration of a contract, you can’t find the gas, get production working and pipelines built, to meet you contract. And only a fool would contract to deliver on that basis.

            In fact, of course, what they did was to meet the contract by outbidding Aussie manufacturers and others in the local market. It was the only way they could.

          • “Why shouldn’t the Australian government protect its own people and industries? Particularly from predatory governments like China who do exactly that for their own industries?”

            Maybe they should. That involves telling Australian gas producers that they can’t sell their gas to China, but must sell at lower prices to Australian manufacturers. It transfers wealth from one lot of Australians to another, and lowers export income.

            China isn’t being predatory. They are paying the going price for gas. And we are willingly selling it.

          • Its not that they can’t find the gas, the problem is they were forbidden from trying. Even if hostile laws are repealing it will take a while to rebuild trust, after they were burned the first time.

      • Nick – you say it’s absurd, but it’s true: https://ausindenergy.com/
        “Australian Industrial Energy (AIE) is developing NSW’s first liquefied natural gas (LNG) import terminal at Port Kembla near Wollongong.”
        Aus’s gas situation is an incredible mess. We certainly do NOT pay the Asian price.

          • Nick
            There was a delay when the downstream piping was looked to be changed (enlarged capacity) and regulatory review seems to have held things up.
            The FSRU – Galleon – has already been contracted to be the vessel and Cheneire has been cotracted to be the supplier.
            Port Kembla is actually only one of six proposed FSRU terminals, but it looks like there may only be 3 or 4.
            One problem with Aussie domestic supply is your current Coal Seam Gas (similar to US’ Coal Bed Methane (CBM) is that it is not particularly cheap gas.
            In addition, the Curtis Island projects were financed under the assumption of long term, fixed supply to Asian buyers. End of the day, US LNG may be available at ~$5/mmbtu, which is a lot cheaper than Aussie domestic pricing.

      • For gas companies the only financial interest is how much they can get for their gas so they sell to the highest bidder. However for Australia the issue is the Australian economy and lower gas prices lead to more manufacturing, hence more jobs, more tax revenue etc. In short there is considerable leverage and a lower local price for gas could pay off in very considerable economic improvement for the country as a whole. The gas companies look after their bottom line, it is the government who should be looking after the Australian economy. The problem is the government has given the gas companies a licence to sell more or less as much gas as they like overseas and is allowing them to set the price at the price of the highest bidder. They should instead be mandating adequate reserves for Australia as the first priority and they should be also mandating a local price which could well be less than the overseas price.

  7. Well, Sir Evil (Liveris backwards) did a fine job of running Dow Chemical into the ground when he was CEO several years back (when I was also an employee). In fact, Dow no longer exists but as a shadow of the chlorine-based chemistry giant I worked for…previously a true innovator and leader in many respects.

    What could go wrong? I’m *sure* he’s got Australia’s best interests in mind!

  8. “Australian manufacturers are demanding cheaper energy to remain globally competitive”

    The word “globally” in this case means China. The climate change economic suicide religion of the West is just what China needs to take over global economic leadership from the West and just what the West needs to hand it over to them.

    In that scenario Australia faces a future as a vassal of China.

    I guess it’s the old cycle we all know all too well. Hard times create strong men. Strong men create good times. Good times create weak men. Weak men create hard times. Hard times create strong men …. and on and on.

    So what we have here is that this cycle is not globally synchonized. But not to worry. The West will rise again. Maybe in about a 150 years or so.

    https://tambonthongchai.com/2020/02/29/prophets-of-doom/

    https://tambonthongchai.com/2020/05/30/wbm2001-the-private-sector-in-china/

  9. There is no need for cheaper energy when there is to be no industry, no manufacturing, no economy. Cheapening energy costs would only encourage growth, consumption, development. We can’t have that. The ideal human existence would be a few very small bands of naked foragers (vegan, of course), keeping a sharp lookout for carnivorous predators.

  10. With the energy programs being implemented across the states ( as well as federally it’s not just the cost but also reliability. Who would manufacture in Australia with the risks that you may have to close down or the whole place could blackout. I think that the massive oversupply of renewables will create a new meaning for the term “ Gridlock”.

    • opening ANY biz in aus is so much retape n regs that its dubious if its worth bothering
      hada few options but the song n dance to startup made it utterly unattractive

  11. All good,check out ownership of Qenos largest share holder is the Chinese .
    Beware what you wish for.

  12. But Nick,
    The lead article says the world price is $4-6 per gigajoule while domestic here is $20. Let us assume these figures are about correct.
    Surely this difference is imposed by the traders. Traders are now largely foreign owned. They have no reason to care for the interests of Australia.
    Australia needs a comprehensive review of ways to regain local ownership/control of all of its substantial businesses, before the members of the review can be loaded up with foreigners whose agenda does not match ours (mine, not sure about yours).
    We have already seen the immense damage done to the Australian economy by dutiful adherance to dubious international agreements like Kyoto and Paris. How stupid does one have to get, to wish for more? Geoff S

    • Geoff,
      “The lead article says the world price is $4-6 per gigajoule while domestic here is $20. Let us assume these figures are about correct.”
      No, it doesn’t say that. It says “Aussie manufacturers compete with overseas companies who pay $4-6 / gigajoule of gas. Aussie companies currently pay $20 / gigajoule.” Companies insulated from the world market can pay less. We can’t.

      I suspect also that that compares $US4 with $AUS20. average spot price (NE Asia) in 2018 was $US9.78/MMBtu ($9.3/GJ).

      Wholesale gas price in Vic was $AUS8-10 per GJ, before the recent crash.

      Maybe traders are a problem, but fracking won’t fix that.

      • Lifting fracking moratoriums and repealing restrictions on exploration would increase supply, to the point futures contracts could be satisfied and domestic prices would fall.

      • Well I never expected you to listen to reason Nick. But it’s truly delusional to deny that a major increase in supply would not lower the price.

        • Its a real shame. Nick has been very helpful in the past, logical, reasonable, pointing out mistakes, all of which contributes to a better understanding. But lately not so much IMO.

        • There is no reason to think that fracking here will produce a major increase in world supply. In fact it is only the smallest states (Vic and Tas) that ban fracking exploration. Qld, NT are open; NSW allows exploration, as does WA recently. That is most of the country, but nothing major has yet turned up.

          • If you look at the link to the inquiry proposals include moving industry West (to take advantage of cheaper Western Australian gas), building a new pipeline, or increasing Eastern state production, so clearly where the gas is produced has an impact. The outsiders episode with Ian Plimer in 2018 made it very clear gas resources were not being developed in Victoria.

  13. Unfortunately for Australia you’ve driven yourselves into an energy situation for which you have no solutions given the attitudes of your leaders who are more willing to listen environmental propwash than to its industrial leaders. By the time you folks wake up to this disaster brought upon Australians by reckless politicians and the silent great-unwashed, the businesses will be gone. When you blow down perfectly good coal fired and profitable electricity generation replacing them with solar, wind and some Mickey Mouse battery from Elon Musk. Where is General Motors. Shut down, mate.

    You have a great country and could be so much stronger but you’ve been played for saps. Tougher times are ahead. If you can avoid the business shattering experience of Covid, count your blessings as Covid with expensive energy means fewer jobs and a lot of pain.

  14. The politicians are brain dead puppets who repeat what they are told.

    Spending another dollar on green stuff will never get us to absolute zero emissions. The green scheme is saturated, so to speak.

    The green scams no longer significantly reduce CO2 emissions in the developed countries because we have reached the intermittent supply amount where the magic batteries are required.

    Germany cheats by exporting half of their wind based electricity to other countries who then return hydrocarbon or nuclear energy when the wind is not blowing in Germany.

    https://wattsupwiththat.com/2018/12/21/germanys-green-transition-has-hit-a-brick-wall/

    In 2017 about half of Germany’s wind-based electricity production was exported.

    And there are more impossible to solve problems along the zero emission path besides the magic batteries.

    The other problem that building the green stuff takes a great deal of energy and the green stuff wears out. No one did real engineering calculations as to how much CO2 savings is realized if power lines and power line right ways, and so on.

    The Green scheme was never checked. The dang thing does not work.

    The electrical grid power supply must increase by a factor of three (with zero emissions) as all heating, manufacturing, and transportation, is according to the brainless scheme going to be powered from electricity.

    Cement cannot be made and there is no solution.

    There is no solution to how to power ships and airplanes problem.

    There is no solution as to how to construct buildings or what is going to replace plastics.

    This is a link to Cambridge’s Absolute Zero report which outlines specific impossible problems which there are no solution to …

    http://www.ukfires.org/wp-content/uploads/2019/11/Absolute-Zero-online.pdf

  15. “The lead article says the world price is $4-6 per gigajoule while domestic here is $20. Let us assume these figures are about correct”

    If someone knows the answer to this please share. It seems to be at the heart of this argument. Are the numbers correct and if they are what accounts for the spread.

    Always sorry to see our Aussie friends in a pinch but you’re proven fighters.

    • My understanding is the gas exporters signed lots of ironclad futures contracts with overseas clients to secure upfront cash for building their export infrastructure, then state governments did the dirty and passed hostile exploration and fracking moratoriums which constricted supply. The result was exporters had to put overseas clients ahead of domestic clients.

      • bacuase the PEOPLE who live ON the land they want to frack arent happy with the idea
        I almost bought land in Qld near Dalby Tara
        the poor buggers that did now have spenton homes and improvements and cant sell for what they paid for the land alone 10yrs before
        prime vineyards in Vic were targeted
        as were croplands
        we have the lock the gate campaign for good reason.
        good water soil n tourism vs very limited profit to one or two landowners

        hmm
        a LOT like the foul birdshreders bribes to some who profithugely at the misery of all others around
        ditto solar farms
        ditto the ridicuolous 99yr tieups of trashy scrub for green covenants the seller rakesit in flogs the land cheap BUT the new owner can do NOTHING but maintain the roo emu and fox n rabbit loaded scrub/firehazard.
        most for sale are beingleft
        the few bought are by other rabid greentatrds who find rural people dont like them much at all.

    • “The lead article says the world price is $4-6 per gigajoule while domestic here is $20. Let us assume these figures are about correct”
      No, it says
      “Aussie manufacturers compete with overseas companies who pay $4-6 / gigajoule of gas. Aussie companies currently pay $20 / gigajoule.”
      Those OS companies (if they exist) are not paying world prices. The $20 is a retail price. Wholesale gas price in Vic was $AUS8-10 per GJ, before the recent crash.

      Eric,
      “then state governments did the dirty and passed hostile exploration and fracking moratoriums which constricted supply”
      Again, you can’t sign export contracts on the basis that something might sometime turn up after exploration and fracking. In fact their problem was an over-optimistic guess as to what CSG could produce. Initial flows weren’t sustained.

      • Initial flows weren’t sustained because gas producers were forced to stop producing.

        And domestic demand is rising thanks to climate law forced retirement of coal plants.

      • Nick, I just looked up eia.gov. The industrial price for natural gas in the US was quoted as $3.35 per GJ (or 1000 cubic feet which roughly equals 1 GJ). Some other prices from the same website import price as LNG $4.34, export price as LNG $4.84 electric power price $2.23 residential price $9.82.

  16. Something doesn’t make sense with the price per gigajoule. In the US the price at Opal is about $3.25/ gj. A comparatively low price for natural gas. And because it is so low, money can be made by liquifying, shipping overseas and selling at an enhanced price. A price, I suspect, no where near $20/gj.

    If the price of gas at the wellhead in Australia is $20/gj, then there is no economic reason that would justify liquifying and selling overseas. If they did the Aussie gas producers would be losing money.

    What am I missing?

    • Futures contracts. Domestic exporters signed futures contracts with overseas clients back when they thought they would be allowed to explore and frack as much as they want. When state governments imposed exploration and fracking moratoriums, the gas supply was constricted but the futures contracts still had to be satisfied, forcing exporters to starve the domestic system to fulfil their contract obligations.

    • “If the price of gas at the wellhead in Australia is $20/gj”
      It isn’t. That is the retail price in $AUS.

      “What am I missing?”
      The economics is right. Gas producers sell to the highest bidder. And if Aussies want the gas, they have to outbid the Chinese.

      • There you go , putting the Chinese first again.

        Why do you hate Australia so much, Nick ?

        • I didn’t build the export facilities. The Australian Government permitted and encouraged it. It earns export income by sending our gas to China. capitalism at work.

      • Nick, so what you are telling me is that the price at the Aussie wellhead is about $8/gj Aussie dollars, or about $5/gj US. About right for international markets. But the price for the Aussie manufacturer is $20/gj US. Is the upgrade in price mostly taxes? If so, there is your problem. I don’t think transportation and middle man charges are going to add up to anything near $15/gj. So is this a supply and demand problem or a tax problem?

        As I recall, the LNG plants were justified based on developing natural gas from coal beds. But the farmers and greenies threw a shoe, using fracing as an excuse, and the government backed down and did not allow for the coalbed development. Is my memory correct?

        • “But the price for the Aussie manufacturer is $20/gj”
          I doubt that figure. I suspect it represents the $AUS retail price.

          “Is the upgrade in price mostly taxes? If so, there is your problem. “
          No. It is a mark up by the retail suppliers. Some is cost of infrastructure, maintenance, billing etc. Our privatised system is inefficient. There is no significant tax component (except GST, which applies to everything).

          “Is my memory correct?”
          Patchy. CSG was a big factor, and has not been blocked by governments. CSG is not fracking. They just couldn’t extract as much gas as they wrote contracts for, and had to make up with whatever they could buy.

          • Nick, Your numbers have to be way off. Middle men do not take $15/gj for their share and for mtc. I suspect there are a lot of taxes taking place. You might find them in the middle mans cost of doing business.

            And CSG is developed using cavitation or fracing. Both work. So I think you have gotten a little out over your skis on this subject.

            So are we talking Aussie dollars or US dollars? US is the normal pricing structure used when discussing the cost of energy. And since manufacturers usually get better deals than the public; Aussie Joe Blow is really getting a hosing.

          • “So are we talking Aussie dollars or US dollars? “
            I think the figures are useless. I am just an ordinary householder in Melbourne; I pay on average $AUS13.5 per GJ. Off-peak is less. I don’t know how these manufacturers manage to pay $20, in whatever currency.

            But you seem determined to find taxes where there are none.

          • “Nick Stokes May 31, 2020 at 10:10 pm

            I am just an ordinary householder…”

            So you are trying to compare domestic prices with that of industry/business? Interesting. Sort of like comparing apples with bricks.

          • “Nick Stokes June 1, 2020 at 1:21 am”

            You haven’t operated an industry or business in Aus have you Nick?

          • Nick hasn’t done any farming, either, but he considers himself qualified to lecture us on that, too.

          • Where do you live Nick? South Yarra, Toorak (VERY VERY rich)? Because it sounds like you don’t have the energy cost concerns of say someone living in Airport West (Poor). Just sayin…

    • If gas producers were allowed to operate normally they could supply enough to keep everyone happy.

  17. Reply to Mr stokes
    Nick you are thick.
    The Chinese are paying $4 to $6 at the Australian Ports .
    The same price should be available to bulk users at the well head / or port .
    The gas that is supplied to Australian industry is not cheap that is and that is what manufactures are complaining about .
    I wonder if you Mr Stokes have ever run a business producing any thing that is useful and know that to make a living you have to be able to sell what you produce competitively ,otherwise you go broke .
    It does not cost $14 to $16 dollars (including profit ) to distribute gas by pipeline to industry .
    The gas exporting companies are supplying their owners with gas in China where they can produce goods with a much lower labour cost than Australian manufactures.
    The anti fracking lobby are doing immense harm to the Australian economy but they don’t give a toss .
    Graham

    • i reckon the consumers making up the loss on price to OS
      and YES we pay damn near 50% tax on fuel as excise
      they suckered people to go to LPG gas conversion cars
      then taxed it double
      as for bottled LPG for us mugs with NO piped gas(many) its 130 + rental of 30 per month for a 100kg bottle
      and that lasts about a month at best just running a small caravan heater
      if your water n stove are gas, no heating you avg around 3mths for a couple no kids.

  18. Liquefied natural gas export prices in the US are less than $5 USD per 1000 cu ft. Australia should offload some of those contracts to the US for a small loss. They could recapture that loss by selling the ng in Australia locally at a price less than they are selling it now.

    There is something interfering with free markets and competition that is creating the high prices in Australia.

  19. Want best priced natural gas & electricity? Come to the USA with your energy intensive industries.
    Current IEA prices:
    Select Spot Prices for Delivery Today
    Note: copy pasted poorly…columns may be off when posted…
    Gas MMBTU Elec. MWH
    Midwest 1.64 22.51
    Louisiana 1.79 21.00
    Houston 1.73 23.50
    Southwest 1.58 – 16.75

  20. Public ownership has never lowered cost.
    “..lose what is left of its energy intensive manufacturing industry.” At times, I believe that’s the goal of who ever funding the climate scam.

    • Couldn’t agree with you more on this subject and the only reason I’m making this posting is to remind everyone (Nick Stokes) that Space X just sent two astronauts into space using a private rocket. When interviewed, retired NASA personnel kept telling everyone how efficient the Space X program is compared to ( layers of bureaucracy driven) NASA space programs were.

  21. Hi Guys – you are all missing one very important point – it isnt just about gas as energy – it also comprises the feedstock for the Qenos plant – so its a double wammy – the price of energy and the price of the raw material from which to make the plastics. Didn’t any of you do chemistry at Uni?

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