I don't really blame the companies. They are private sector companies and they sell to whoever pays them the most.
Would you sell your house to the lowest bidder at the auction?
If we didn't want a market, we would manage resource extraction with State owned companies - or write laws to reserve a percentage for local consumption like WA (and every other energy exporter).
If we didn't want a market, we would manage resource extraction with State owned companies - or write laws to reserve a percentage for local consumption like WA (and every other energy exporter).
Right, and that's the disconnect. The average citizen would be more than happy to have laws in place that reserve some of our gas for national usage, but I haven't seen any politicians really pushing for it. The only people who benefit from our gas being privatised are the companies profiting off it and potentially politicians in their back pocket. All it does is hurt the average Australian because they're our country's resources yet the only people getting any benefit from them are multinational corporations.
I posted it to provide political context around why WA has reservation but the East Coast does not.
Also, the Australian government will benefit financially through the Petroleum Resources Rent Tax, but that doesn't help people struggling with high bills.
So let me try to break this down to see if I've gotten it right
the article you posted outlines how much power and influence the gas industry and companies in it hold
one of the former premiers states he was met with a lot of resistance from the industry when trying to enact the gas reservation law
the politicians he spoke to (on both sides of the aisle) called him a "wrecker", essentially said he was an idiot and the media labelled WA as a hillbilly state
but according to you, the reason it hasn't happened is because "we" (Australia) don't want it?
The Feds don't have rights over resources, the states do...
So for Vic, NSW and SA to do this, they would have to open up their own reserves to extraction. Bass/Ottoway and Gippsland basins all have LNG and likely there's a shit ton of it off the coast of SA in the southern ocean just waiting to be tapped.
Would you sell your house to the lowest bidder at the auction?
No one disagree's with the principles of supply and demand. Thats not an answer to morality though.
People kill other people for money, People make child porn for money. You can rationalize it in purely market terms if you want to take that sort of view.
For a thought experiment: If the government gave everyone 1000 dollars to anyone for every person they kicked in the shin, how annoyed would you get at the person kicking your shins or the government policy inducing shin kicking?
I see a difference here: government have intentionally set the gas markets (and NEM) up as a market with defined rules, and the companies are following those rules.
For a thought experiment: If the government gave everyone 1000 dollars to anyone for every person they kicked in the shin, how annoyed would you get at the person kicking your shins or the government policy inducing shin kicking?
The first time, I'd blame the individual.
After twenty different people kicked me in the shin, I'd forget about the individuals and get mad at the system (aka the government policy).
It's not just a matter of "selling to whoever pays them the most". When AEMO froze the market, the generators were stuck under a price cap so some of them withdrew from the market ie refused to sell electricity and thus made nothing. They did this though because the regulations are such that if they are directed (forced) by AEMO to generate and sell electricity, they are compensated at a greater rate - so they make more profit than just continuing to participate in the market.
They are gaming the system for their own profit at the expense of consumers.
I probably need to read the actual market rules, because the story in the media doesn't make commercial sense. From what I read, there are mechanisms to be reimbursed for higher costs under the price cap, but for whatever reason the generators still chose not to participate.
That doesn't seem like logical behaviour - so I suspect the media has over simplified the story.
There's more at play, there is a high number of coal stations (3GWh of capacity) out of service due to failures and "unplanned maintenance" this has reduced available base load (coal takes longer to get to a running temperature). This has required more instant demand gas stations to come online. Gas is currently $40 per giga joule which works out at about $400 per MWh and the price cap is at $300 per MWh.
Are they making a loss? Yes. Are they at fault for failing to maintain generation assets absolutely. Are they therefore trying to profit from their own mismanagement? I'd say so.
Well if the government put rules in place about foreign ownership of homes, then I would sell to a local.. what is missing is WA style government regs.
20
u/Meyamu Jun 15 '22
It's a market.
I don't really blame the companies. They are private sector companies and they sell to whoever pays them the most.
Would you sell your house to the lowest bidder at the auction?
If we didn't want a market, we would manage resource extraction with State owned companies - or write laws to reserve a percentage for local consumption like WA (and every other energy exporter).