Essay by Eric Worrall
More expropriation of Aussie fossil fuel assets. Hands up who plans to invest in the Aussie energy market?
Perrottet gives himself dictator-like powers over coal
Aaron PatrickSenior correspondent
Updated Dec 21, 2022 – 4.16pm,first published at 4.01pmIf Dominic Perrottet decides there’s a coal emergency, an emergency there is.
And in such an emergency, the NSW Premier will have powers over the state’s black coal that might cause a Chinese central planner to blush.
Changes to the Energy and Utilities Administration law passed on Wednesday give his Energy Minister the power to set maximum prices, decide who coal will be sold to, and control the use of the coal, for any period. In other words, the government can seize control of the whole market.
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The law’s self-declared objective “is to put downward pressure on electricity prices during coal market price emergencies by allowing for the giving of directions in relation to the price and domestic supply of coal used to generate energy”.
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Read more (paywalled): https://www.afr.com/companies/energy/perrottet-gives-himself-dictator-like-powers-over-coal-20221221-p5c81u
The most shocking part of this act of expropriation is the state of New South Wales has an allegedly Conservative government – Dominick Perrottet is a Liberal. You normally expect this kind of behaviour from radical socialists, not a party which claims they support freedom and minimal interference in people’s lives.
But they are a Conservative state government which has bitten deeply into the poison green apple.
I guess the lesson is, don’t believe everything you read on the tin.
I’m not sure what the Liberals think passing such laws will do to coal investment in New South Wales. Even if the powers are never exercised, the threat of expropriation will undermine confidence and have a chilling effect on investment.
Who in their right mind will put money into new NSW coal projects, when the government has just granted themselves the right to seize control of your product, break your contracts without compensation, and redirect supplies to whomever they choose at the price they set? The only rational behaviour in such circumstances is to run the existing mines and facilities into the ground, and get your money out of the state as quickly as possible, before the government expropriates your business and ruins you.
Update (EW): The previous expropriations I can recall were threats of retrospective export controls on natural gas, and the suspension of the national energy market. Both events happened earlier this year.
… before the government expropriates your business and ruins you.
Just like Russia did to Yukos Oil’s chairman… . No need to get violent. They will just tax you exorbitantly (try, 100% — or more!), then, throw you into prison for not paying.
(https://en.wikipedia.org/wiki/Mikhail_Khodorkovsky )
Let’s imitate Russia. Sounds like a great plan.🙄
Some politicians are desperate to find a way to keep us productive while they help themselves to as much of the product of our labor as they desire. I suspect this is why some of them find China so fascinating, China has come closer to this “ideal” than other communist states. But China’s economy is about to suffer a severe whoopsie, next year should be interesting.
Its virtue signally from the NSW government.
They have an election on 25th Mar next year and they are clinging to power even now with only 45 seats out of the 47 seats for a majority.
Wont be any prices set just worry beads being counted.
As the government owns the coal resource and the miners merely buy a license and pay royalties ( very handsome sums currently) they can of course set what ever conditions they like and as an monopoly business knows , you can squeeze the licensees until the pips squeak
avejames16 is SPAM!
That is a nice story to support bad Russia political narrative, but this isn’t how it went in reality.
In reality Khodorkovsly and his bankers Rothschilds (surprise) created another company, a bank Menatep, wiki says it had $29 Billion dollars in assets.
What they did is the oldest banker financial scam in the book – started printing themselves shares on pieces of paper and buying up everything in sight. Then stacked asserts in Yukos, and left liabilities in the bank.
Basics of scam : On a pieces of paper you write: Yukos +29$ Bln, bank -$29 Bln. Then they bankrupted the bank and got left only with all the assets.
That’s a classic banker financial scam, that’s why Khodorkovsky got his company confiscated and went to jail for 20 years.
It is now a nice , well behaved, but very ungreen oil company.
https://en.m.wikipedia.org/wiki/Bank_Menatep
Richard Nixon, that RINO idiot, put price controls on oil. Socialists never learn, or just do not care.
Nixon also unleashed the U.S. dollar from the last constraint (gold standard) in 1972, thereby enabling hypertrophy of finance.
Now, trillions of dollars worth of currency slosh around the world every day. The physical world fades into the mist while politicians and financiers amass ungodly fortunes at the expense of everyone else.
I think the coming off the gold standard was more a symptom than a cause. The reality was that in the Great Society/Vietnam spending orgies, the currency was inflated. Being willing to give anyone an oz of real gold for only $US35 was a deal too good to pass up (gold was worth more than that). Staying at the fixed peg, having already inflated the currency, would have quickly drained the US of all gold stocks. At least, unlike in the 1930’s, individuals were allowed to keep what gold they had and buy and sell at will.
But we loved him for it. 55 speed limit, The gasolines stopped, Wind Fall profit Taxes, 12% return on Federal Savings and Loan Insurance accounts, Food was cheap, Textiles were appalling and made from oil, the TV show Dallas, turning the heat down from 78 to 72 and the AC up from 68 to 72, building houses with tiny windows, and buying used caddies cheap and midget Japanese cars that got 50 mpg. It only took 6-7 years to stabilize demand on oil to keep the price on gasoline from becoming European. Maybe it was Jimmie who stabilized the gas thing by looking for allies against the Shiite Iranians. By the 90’s when we had a huge military presence in Saudi Arabian did gases finally drop back to sub 1974 prices.
Desert Storm was a pretty high price.
Reagan dropped price controls, which dealt with the shortages.
I don’t remember gas lines or shortages after 1975. I do remember prices jumping from 65 Cents in 1975 to $1.62 in D.C. in 82-83. But we also had 11-13% inflation almost every year from 1975-1984. Price ceilings are damaging long term but did we want $5 a gallon Gas like Europe in 1980 when 7 years prior gas was 35 cents? Meanwhile we took our vacations in Canada cause of the exchange rate, the imperial gallon and much cheaper gas. It is a history worth digging into cause the American people were being hood winked and told our demand for gasoline was the problem….. sound familiar. We were willing to do anything to stick to OPEC. Then the Dessert Storm Oil price collapse was a bit of justice to those who had hood winked us in the US and Texas went into a major recession.
Long lines in the second oil shock of 1979….prices way over $0.65.
Yes those “energy crisis” years were a thriller to live through – but pretty small stuff compared to what we see today – with the exception of actual shortages of gasoline as we were slow adapting to the OPEC supply restrictions used to jack up prices. I never saw lines or closed stations where I lived, but did encounter them while on an extended business trip in North Carolina for a few days. Incredibly, when we returned to the US in 1989 having lived overseas since 1980, gas prices were pretty much what they had been when we left.(or less).
Of course, the 1970’s oil “shock” was externally imposed by OPEC. Supply constraints today are self-imposed stupidity.
Thanks, Nice….somebody else remembers. OPEC took issue took our sales of jet fighters to Israel 1973 . Yet when they need our jet fighters to defend them against the Shiites during Dessert Storm, you had the greatest price destruction of oil prices without government intervention in the market place since the Great Depression. But we paid the price with our the people who served there. Bush Sr. was so surprised that he lost but, the price collapse triggered a small recession and that did it for him.
“the price collapse triggered a small recession and that did it for him”
Ross Perot did it for him as the 3rd party candidate took much of the conservative vote.
re: “Bush Sr. was so surprised that he lost”
Two words, “Ross Perot”
Here’s a prediction:
Florida’s Gov. DeSantis loses in the 2024 Presidential election to whomever the Dems nominate because Trump runs as an independent.
Six words: “Read my lips, no new taxes”
Yeah. no shortages but two years ago gas in PA was $2.19, 2 months ago is was 5 bucks, more than 100% increase. Somebody is making out like bandits. We ignored gas prices and the pandemic and still had fun…life is too short. And how much of a crisis has gas prices with all those big Fed Checks.. Small potatoes. It’s the harangue and narrative crapola that is the biggest challenge.
You speak an absolute fairy tale. Windfall profit taxes occurred after Nixon was gone, in fact six years gone in 1980 when Carter was president. Carter stabilized exactly nothing, deregulation took care of oil prices which declined to the range of $20 per barrel by mid 1980s. The 12% return on CDs and other instruments didn’t occur until late in the Carter Administration and were the result of a strategy to combat inflation by controlling the money supply and letting interest rates go where they may.
Even Dallas didn’t air until 1978. Couldn’t do a tiny bit of research apparently.
Wage and price controls on everything were in place for 2 years, ending in 1973. Of course, it was a disaster. As econ 101 predicts, there were shortages. And pent up wage increases. Inflation, while modest compared to what we have now, was higher when the controls came off than when they were put in place.
The big oil crunch was later. Those wage and price controls were purely about the inflation from the huge spending spigot of the Vietnam war.
The inflation was the result of “guns and butter” spending of Johnson.
Cannot agree more with the uncertainty principle.
If you read about FDR’s Great Depression, it was the uncertainty of the regulatory system FDR set up that discouraged businesses from investing.
Imagine: FDR put in place a regulatory state that promoted high prices. If you sold product below a certain state set price, you were breaking the law. This was based on his understanding that depressions are caused by low prices. Politicians should be given very little power.
But, not to get mad. There is no much inefficiency built into such a system, anybody with brains and will can easily get wealthy.
Price fixing – ‘the worst economic idea in the world’ – Thomas J. DiLorenzo
I think it was during the suddenly truncated reign of Louis XVI of France that if there insufficient bread for sale then bakers were obliged to sell cake at the same price.
While his Queen, Marie Antoinette, may have been treated slightly unfairly by history for saying “Let them eat cake”, events on the ground turned out badly for both of them.
Two factual corrections.
China has a set price of CNY700/tonne for thermal coal mined internally. That price will be set throughout 2023. And it is how they have come to dominate global manufacturing.
All woke companies and countries are “getting out of coal”. So who can get money in Australia to start a coal mine. Who would want to expose their business to the sort of grief Adani had to work though to open a coal mine in Australia.
There is no point investing in coal in Australia while the investment environment is so hostile. Wait until the lights go out and get government subsidies to open up new coal mines. It has happened in Germany.
Actually, these actions are creating a great investment opportunity for coal investors. You are entirely correct about investing in NEW mines. But the failure to invest in new production facilities yields two results: existing coal mining companies have stopped new capex for R&D of new development, leaving a huge amount of profits for stock buybacks and dividends. At the same time, prices for the future delivery of coal is soaring on the expectation that the lack of new mines means coal production will not grow while demand does..
An analogous situation exists for oil and natural gas. The ff energy companies are making profits hand over fist by governments restricting production. It’s a great time to own stock in these companies.
This is why LNP is a lost cause.
25 million people are OK with this? It didn’t take long for Australia to go from a democracy to a Marxist state.
Teaching of business and capitalism in Aussie schools has been downgraded for a long time, outside of specialist business courses. Most people don’t understand where this will lead. Capping prices for now has widespread support, lots of Aussies have swallowed the greedy exploiter narrative.
It’s not like they actually asked us. All of the leading parties are 100% into the whole Climate Change Scam. There’s almost nobody that we can vote for to return us to reality.
Australian responses to Covid were the trial balloon for the transition. Aussies meekly put up with Chinese-style measures. Military street patrols, drone surveillance, police smashing up cars at roadblocks , police violence, people locked into apartment blocks with their mail and deliveries checked by police. These were reported in Australian mainstream media! But govts got away with it so why wouldn’t they push for more Marxism?
Australian responses to Covid were the trial balloon for the transition.
I’m reminded of this from 1984
Not 25 million, but cities are full of people who are employed by governments or depend on government grants, budgets, etc.
Un … believable ! I’m shocked … not ! Australian politicians in the main are all trying to out-woke one another.
Keep it up for 3 more years – and Australia will be a very cheap country to visit. See you in 2025.
The plan is coming together. Take over an industry ostensibly to control its emissions, or carbon tax it until the commodity itself is of low value compared to it’s added “social cost”. Better than taxes to spin through the economy….you can claim you are saving the world….and have total control over the economy based on some petticrat’s feeling of green-ness….this in addition to just plain old sales tax, profit tax, payroll tax, and inheritance tax of yore.
But just like toll roads, sooner or later someone will run for office on a platform of removing the tolls….
It’s for those who are sure they can run any industry better than those who make their daily living in that industry….Efficiency does not matter just velocity of spending….
Joe Biden approves this stupid NSW move. Fortunately, because of 5A last clause, he cannot persuade Congress to do same.
No he cant . Fundamental differences
NSW is like many former UK colonies where the mineral rights ( incl gas and oil) remain with ‘the crown’, not the land owners like US ( unless the land is owned by federal or state )
Thus NSW government still owns whats in the ground , the miner merely has a license to extract which they would have paid both exploration rights and then mining royalties per ton.
“No he can’t” what? Actually read Rud’s comment – he saying Biden would love to be able to do the same but can’t (because of the 5th Amendment to their Constitution I believe he is saying)
It’s just sad. The (non-)fact of fearful CAGW is believed by so many in Australia.
False premises lead to false conclusions which lead to useless or harmful actions.
Real scientists discuss how the observations could be the way they are. They invent and test various theories. See what the theories predict, then test away. Rule out theory after theory until one works out.
Politicians are elected by a majority. They think science works the same way — take a vote among scientists.
As Mark Twain may or may not have said, “It ain’t not knowing that gets you in trouble. It is ‘knowing’ things that just ain’t so.”
Why would you hold down prices for fossil fuels when you already believe renewables are cheaper and smart money will be pouring into them for higher returns?
https://reneweconomy.com.au/cefc-jumps-back-into-solar-market-as-cost-hikes-put-82-pct-renewable-target-at-risk/
It’s all been modelled and we’re on the fast track now with the Integrated Service Plan-
https://www.ecogeneration.com.au/aemo-isp-2022-renewables-muscling-out-coal-faster-than-expected/
Cleaner and getting cheaper-
The energy regulator also expects strong battery uptake in the late 2020s and early 2030s as costs decline, and same with EVs thanks to falling costs, greater model choice and more charging infrastructure.
Why all the subsidies then?
That’s where it gets really weird. Renewables are so cheap they need huge amounts of government support to make them happen. Proponents seem incapable of seeing the contradiction.
Apparently “renewables” required a lot of cheap reliable fossil energy to be even remotely competitive – or the LCOE calculations were just lies to begin with.
“Levelised Cost of Electricity (LCOE) and Levelised Cost of Storage LCOS) represent the average revenue per unit of electricity generated or discharged that would be required to recover the cost of building and operating a generating plant and a battery storage facility respectively. LCOE is often cited as a convenient summary measure of the overall competitiveness of different generating technologies.”
“LCOE and LCOS by themselves do not capture all of the factors that contribute to investment decisions making direct comparisons of LCOE and LCOS across technologies problematic and misleading as a method to assess the competitiveness of various generation alternatives”
‘Levelised Costs of New Generation Resources in the Annual Energy Outlook 2022’, US Energy Information Administration (eia) March 2022.
Haven’t NSW governments been flogging off coal mines and assets at significantly below value prices for a decade or more now?
Perrottet may as well just come out in the open and declare that this government is “harvesting” the industry while there’s a way to suck some more bankable $$$s out of either the coal minesr & operators, or the distributors, or the retailers or the consumers.
These people are genuinely deluded IMO, they think renewables are going to kick in and make it OK any moment now.
Eddie Obeid and his Minister Mate McDonald could give lessons in gettin yer hands on cheap coal mines!!
Well, you elected them
Economics is a very mature science . The principles of micro and macro economics are well established ; and what works and what doesn’t in terms of public policy. All the “experiments” have been tried. How is it possible that anyone at this point in history could think this is a good idea?
Somebody should tell him about the law of supply and demand. It’s been the bane of all ‘nationalization’ of resources forever.
Presumably this will apply also to exports. Deciding to cut off exports to China, or attempting to impose a very high price might be a meddle too far in international politics for a state government.
But I have read this; “The NSW Government has declared its fourth renewable energy zone – and the first to include access to offshore wind – as it races to put in the infrastructure for new wind, solar and storage to replace the country’s biggest fleet of coal generators.” From the Institute for Energy Economics and Financial Analysis.
They are killing the coal.
hmm{run the existing mines and facilities into the ground, and get your money out of the state as quickly as possible,}
strikes me and a lot of other thats EXACTLY whats BEEN happening already
and aussies are bearing that cost AND the present ripoff prices using extortionate EU pricing when their costs havent gone UP in any way shape or form at all(ok diesel is about it) still zero justification for the prices charged at home
so
I disagree strongly and the govt should be running ALL essential services power water gas and the rest!
ditto this stupid PPo deals for roads never ending tolls never removed and massive OS profiteering at our expense.
about time we reinstated a common-wealth bank where interest n profits go back into aussie hands as well and middle finger salute to the UK n yank banksters
You have your very own Macquarie.
Can I hear Gough Whitlam and Rex Connor cheering from their socialist graves?