Number one corporate welfare initiative of the week is indubitably the proposal to build a gas pipeline from west to east.
Already reeling from rocketing energy bills, consumers are now to be tapped for a lazy billion dollars so gas producers in the west can export their stuff from Gladstone LNG terminals in the east.
It's a beautiful thing for industry. Browse and Gorgon are short of export contracts. Gladstone is short of gas. The public, meanwhile, is short of information.
Things boiled over in a NSW parliament budget estimates hearing last week.
"My message to the rest of the industry is simply that no one will trust you until you are honest, no one will trust you until you are transparent, be it the community or the government," said NSW energy minister Anthony Roberts. It was an extraordinary blast.
Consumers face a tripling in the gas price as a result of major producers piping their gas to Gladstone in Queensland for export to Asia. Australians, who until now have enjoyed an abundance of locally produced gas at low prices, will soon have to pay export prices.
Industry has used its rhetoric about looming shortages to push for the development of controversial coal seam gas projects in rural NSW at Gloucester and Narrabri.
Anthony Roberts told the parliamentary committee he had repeatedly asked the energy industry's peak body, the Australian Petroleum Production and Exploration Association (APPEA) to present information about their gas supply arrangements to government and the public. "To my great disappointment, they have continually refused to do so.
"It is regrettable that the east coast gas market is faced by issues of transparency. I am not aware of any public policy-maker in Australia who has a detailed understanding of how much gas is being contracted to overseas customers. I am not aware of any public policy-maker that knows whether the east coast gas market has the ability to deliver this without causing domestic shortfalls.
"It concerns me greatly that the parties to these joint ventures may have overcommitted themselves believing domestic supply may have come on faster than it has and in greater quantities. Frankly, I find this a completely unacceptable situation. We cannot in New South Wales reserve our gas when we supply only 5 per cent of our own needs."
Australian policy-makers were being left in the dark, said Roberts.
Although campaigning for the development of the coal-seam gas projects to alleviate the looming shortages, APPEA has refused to release supply and demand figures for the industry.
Meanwhile, as recent results by Energy Australia and other gas retailers shows, gas demand has been falling sharply.
"Part of the massive fall of 15.9 per cent was customer loss, part was the warm weather, however part was declines in demand," says Bruce Robertson, an analyst who helped to expose the "gold-plating" of the nation's electricity networks and the misleading rhetoric that demand for electricity was continuing to rise (therefore justifying the price hikes). Robertson sees the current predicament in the gas business as a rerun of what occurred in electricity.
"These falls in demand are occurring as consumers react to the announced price rises," he said.
"For example, my parents were recently faced with the decision to repair or replace their ageing gas central heating. Born of the depression era, spending money unnecessarily is not in their DNA. They chose to replace their system as the new one was some 30 per cent more efficient."
Once again, Robertson points to inflated demand forecasts issued by the Australian Energy Market Operator (AEMO), which had underpinned industry's over-spending on electricity networks.
"Just as the AEMO has hopelessly over estimated demand in the electricity sector it has also hopelessly over estimated demand in the gas sector."
Industry has conveniently glossed over the slackening demand while beating up fears of an impending "cliff" in supply.
He dismisses the official forecasts, both in gas and electricity, as self-serving and historically dead-wrong.
In 2011-12 the forecast for 2021 annual energy in the national electricity market was 221,654 GWh. Just two years later the forecast for 2021 was 189,183 GWh. Down 15 per cent.
As for gas, in 2011 AEMO forecast 2021 east coast demand would be 993 petajoules. Two years later the forecast for 2021 was 599 petajoules. Down 40 per cent.
Wholesale gas prices are widely forecast to rise from $3 or $4 per gigajoule to $7.50 to $10 per gigajoule over the coming 18 months as a result of gas being piped by producers to Queensland to be turned into LNG for the Asian markets.
Yet Robertson sees demand for gas dropping dramatically in 2015 and 2016 as consumers wind back their usage in reaction to rising prices (as has occurred in electricity).
AGL's full-year results presentation last week showed precisely the trend that Robertson has been predicting. NSW gas volumes for consumers were down 8.4 per cent. Gas volumes for businesses were down 10.3 per cent.
All these falls in volume have occurred before the real price rises have hit.
Ironies abound. The west coast of Australia exports way more than it consumes.
The east coast of Australia exports way more than it consumes.
The proposed gas pipeline may merely push prices up to the point at which demand will fall precipitously.
All this against a backdrop where there are no demand figures for gas from APPEA, nor supply figures. Consumers can only hope there is a feasibility study before the feds splash their billions on a new pipeline.
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