Energy crisis: It’s the ‘market’, stupid!

The Turnbull government still wrongly blames South Australia's energy problems on renewables.
Friday, March 17, 2017

Can the political debate about Australia's “energy crisis” get any more weird?

Malcolm Turnbull’s Liberal-National Coalition government continues to generate wonderful script material for the likes of John Clarke and Brian Dawe, as Clarke and Dawe: The energy market explained, their latest episode on ABC TV shows.

Blaming wind power for South Australian power outages caused by extreme weather events and distortions in the energy distribution market was a blunder you would think the Turnbull crew would want to distance themselves from. But federal energy minister Josh Frydenberg regurgitated this line again at a press conference with a ropeable SA Premier Jay Weatherill, who gave him a slap down that went viral.

But it didn’t stop there. There’s more. There’s the gas crisis!

Turnbull has suddenly discovered that domestic gas prices are shooting up despite the fact that Australia is set to overtake Qatar as the biggest producer of LNG (liquid natural gas). This is because most of it gets exported by energy companies, after they were given access to these resources almost for free.

Last year, the Australian Tax Office revealed that only 5% of oil and gas companies paid any resource taxes even though LNG offshore projects in Western Australia and Queensland generated $25 billion in revenue in 2015. Generous allowances for writing off exploration and other capital costs allowed these projects to earn more than $187 billion before paying a cent in resource tax.

As the fossil fuel multinational corporations have signed long-term export contracts, the price of Australian LNG is cheaper in Japan than in Australia, prompting the suggestion that gas prices in here could be lowered by buying gas in Japan and shipping it 6700 kilometres back to Australia.

The market knows best, we are told, and it must be obeyed.

But as Adjunct Associate Professor Mark West of Sydney University's School of Social and Political Sciences, explained in The Conversation: “There is no market, only a cartel of six big players who control the price: Santos, Exxon, BHP, Origin, Arrow Energy and Shell. Markets have visible prices and quantities on the bid and offer. The cartel even hides information about its gas reserves from government.”

Just when these facts were emerging into the public debate, Prime Minister Malcolm Turnbull came up with his latest conjuror’s trick, the release of a thought bubble about a $2 billion expansion of the Snowy River Mountain Scheme. This follows his infamous defence of dirty coal power generation.

Privatising energy and letting the “market” rip has caused all sorts of weird distortions. Energy is shuttled to and fro between states and between countries just to make a hot sale. Meanwhile, providing a secure and ecologically sustainable energy supply to society is clearly not the market's objective.

The world urgently needs to be liberated from the “market” and its political salespersons. That’s what we think at Green Left Weekly, where we look behind the veil of the “market” to expose the real powers at work and their motives. We need your help to keep on going.

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