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Tuesday, February 18, 2014

Tony Abbott fails to see beyond storm in a teacup

Tony Abbott's policy on rising energy bills consists solely of great outrage and excitement about a trivial matter - a price on carbon. Over 5 years electricity prices in Australia rose by 89 percent. The carbon price contributed 10 percent of this 89 percent.

Interviewed at length about what other measures may reduce the price of electricity, Tony Abbott was unable to offer a single idea.
("Abbott: The Man without a Plan" See more ...)

Electricity bill rise - $2 per year due to carbon tax

What will happen when natural gas price doubles next year

Manufacturing Australia, an industry body, says with no limitations on exports of Australian natural gas, local manufacturers cannot secure long term contracts for gas.

It says "what gas is available is skyrocketing in price by up to 200 per cent. Left unchecked this crisis will permanently push many manufacturing businesses over the edge, costing Australia 200,000 manufacturing-reliant jobs and $28 billion in economic value."

Many high energy using companies are calling for a national reservation policy, similar to a system in place in Western Australia.

A national reservation policy would require major LNG projects to set aside 15 per cent of gas production for local industry and households.

The Bureau of Resources and Energy Economics reports that a reservation policy may help to keep domestic gas prices down.
("Will New South Wales run short of gas by 2016?" See more ...)

Views that natural gas prices will double next year

AUSTRALIA'S wealth of natural gas is reserved for export. The result is steeply rising prices for household gas and power and a choking effect on an otherwise healthy domestic industry and jobs.

According to the Queensland Competition Authority, electricity costs will rise in the next year by around 29 per cent.

Dow laid out the failures of policy that have delivered soaring retail prices and increasing suppression of industry and investment in a paper last month for the Industry Minister.
("Gas price hikes due to policy failure
CRAIG ARNOLD | The Australian | February 24, 2014
" See more ...)

SANTOS says it is so confident Australian east coast gas prices will rise that it is using prices close to $9 a gigajoule - which is two or three times current gas prices - to assess its gas reserves.
("Santos confident gas prices will rise" See more ...)

Australia’s natural-gas buyers are poised to pay more even ... because higher prices in Asia are spurring exports.

Wholesale purchasers in eastern Australia, who paid A$3 to A$4 per million British thermal units on average over the past decade, are being asked for more than twice as much when they sign new supply contracts or renew existing ones, says Wood Mackenzie Ltd., an energy research company.
("LNG Export Surge Boosting Prices for Australian Buyers: Energy" See more ...)

What other countries do

Noble Energy and its development partners fought aggressively for the right to export 40 per cent of the natural gas in Leviathan and nearby fields, winning that right late last year in a decision from Israel’s supreme court.

[Reserving 60 per cent for domestic consumption.]

“You knew that Israel would be pragmatic about negotiations with Noble Energy on this,” said Tim Rezvan, an energy analyst at Sterne Agee. “Leviathan is too important for the country as it works to produce more energy locally.”
("Israeli natural gas fields hold big promise for Noble Energy" See more ...)

Gas and electricity price differentials between major regions are expected to persist to 2035, affecting relative competitiveness and influencing investment decisions. Improving energy efficiency can help to mitigate the economic impact of relatively high industrial energy prices.

Chart - Natural gas prices by region
Natural gas prices by region

("International Energy Agency (IEA)" See more ...)