Opinion: How weak governments, the
energy giants, shock jocks and greenies
have duped us on gas prices
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DES HOUGHTON

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THE COURIER-MAIL
AUGUST 09, 2014 12:00AM
HOW could Australia get it so wrong? In a nation with some of the
most extensive gas reserves on Earth, domestic prices are set to
soar again.
Gas prices will go up another 20 per cent between now and 2018, according to
forecasts lodged with the Australian Energy Regulator by gas distributor Jemena. No
one in business or government that I spoke to disagrees with Jemena’s forecasts.
Keen market-watcher Bruce Flegg, the Member for Moggill in State Parliament, fears
consumers will be hit with a double whammy of spiralling energy prices. In
Parliament and in newsletters to his electorate, Flegg warned that consumers and
businesses were about to take a hefty hit.
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The gas price hike will force many businesses to switch back to electricity, thereby
prompting further increases in our domestic power bills. And some power-hungry
manufacturers are pulling out of Australia and heading for the US where power
prices are half.
Much of the gas still trapped in underground coal seams in Queensland has already
been sold overseas.
Australia has to queue up with the rest of the world to buy domestic supplies.
Federal and state governments erred by not insisting on a domestic reservation
policy when the coal seam gas boom took off in the ’90s.
Where was the national interest test?
The Queensland Government especially fell for the line from the big players like BG
that domestic prices would not rise.
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Paradoxically, we face an energy crisis at a time when we have never had so much
energy.
We have been misled by federal and state governments, we have been misled by
the gas giants and we have been hopelessly misled by green groups like Lock the
Gate, which have exaggerated the dangers of CSG.
NSW premiers Barry O’Farrell and Mike Baird have kowtowed to protesters and that
bumptious little blowhard Alan Jones, who has been running a damaging scare
campaign on his radio show.
With gas projects blocked, NSW is now in the embarrassing position of having to
import 95 per cent of its gas from interstate.
Jones and Co are making it worse for consumers by helping to stop gas flows that
may ease prices.
Victoria, too, has kowtowed to the Green-Left and has banned fraccing.
Origin chief Grant King, a partner in one of three giant LNG export plants being built
at Gladstone, has said his company estimated more than two-thirds of the gas used
in power generation on the east coast and South Australia would be diverted to
exports.
Flegg told Parliament the Queensland price would jump “from around $3 a gigajoule
to around $10 a gigajoule and, on many estimates, $12 a gigajoule or even more”.
Compare this with the current domestic US price for gas – around $US4.50 a
gigajoule.
Many energy projects have been blocked after green groups exaggerated the dangers of coal
seam gas. Picture: Jason O'Brien
“A tripling of current gas prices and the upheaval for business and domestic
consumers could be overstated,” Flegg told the House.
“Domestic consumers will pay huge increases, but the real pain will be felt by
industrial users. We have already seen the amazing decision by Stanwell to mothball
Swanbank E because it is uneconomic at current gas prices. The Grattan Institute
estimates domestic users will pay an extra $1.4 billion annually for gas, with
households paying up to an extra $160 each year.
“The food processing industry is estimated to pay $170 million extra. One of
Queensland’s largest companies, Incitec Pivot, with a market capitalisation of $5
billion, has chosen Louisiana in the US for its $850 million ammonia plant because of
what it describes as the ‘gas market dislocation in Australia’.”
Flegg said many energy-intensive companies such as metal refineries, fertiliser
producers, explosives manufacturers and gas power generators would be unable to
compete.
“The chief executive of BlueScope Steel said that Australia is the only country in the
world that exports gas without having a national gas policy or understanding how
gas is positive for value-added industries as well as export,” Flegg said.
He quoted Paul O’Malley, from BlueScope, who had spoken of “a train wreck
coming”.
Flegg said he would have supported a domestic reservation policy.
Despite the lack of domestic reservation, the news is not all bad, of course.
While consumers might be stung unfairly, the gas revolution is bringing untold
wealth.
The latest Budget papers tip royalties from CSG to rise from $68 million last year to
$200 million this year – then to over $550 million by 2015. By 2016-17, royalties will
climb to $630 million a year and stay there for goodness knows how long.
Despite the lack of domestic reservation, it’s clear that LNG demand will provide jobs
and a secure revenue stream for Queensland families and towns for generations to
come.