When the Prime Minister sits down with gas industry leaders to try to work out a way to alleviate the imminent east coast gas supply crunch, he will probably have to begin with an acknowledgement that the situation is no surprise to the Federal Government or the eastern state governments.
It is a fact that major companies and the industry representative group, the Australian Petroleum Production and Exploration Association, were briefing governments and doing public presentations on the topic as long ago as mid-2014.
The penny has finally dropped – and it has landed with a much bigger thud than anticipated three years ago because various state and federal policy initiatives have conspired to make the matter worse – notably the rush to renewables (especially in the blackout State, South Australia) and the lockdown of natural gas resources in Victoria, parts of New South Wales and the Northern Territory.
“Blackout warnings as gas runs out” and “Gas crisis looms as states bicker” were the front-page and next day headlines in The Australian newspaper this week.
The Australian Financial Review added another political dimension, echoing a warning by Senator Nick Xenophon that the Government’s promised tax cuts were at risk because of the “Power and gas crises”, which Senator Xenophon needed to be sorted out before his SA-based party would support the Government’s planned tax cuts.
Meanwhile, manufacturing businesses, small businesses and consumers are having to cope with steeply rising gas and electricity bills. Interestingly, the two States with the highest penetration of renewable energy – SA and Tasmania—are the ones with the nation’s highest electricity prices – 150% of the national average in SA and 200% in Tasmania.
The sad thing for Australians is that, as noted by The Australian, the problem is self-inflicted.
“As the Australian Energy Council points out, short-sighted feel-good policy making stemming from a belief that low-carbon emissions must be prioritised is largely to blame.”
At the root of the problem are “overlapping renewable energy targets at the state and federal levels, coupled with looming uncertainty about the future direction of energy policy.”
But don’t bother trying to get the anti-fossil fuel lobby to acknowledge this. Their religious support for immediate shut down of coal and gas-fired electricity is undented by the now universal warnings of what the Prime Minister called a “national energy crisis”.
According to the Climate Council, anticipated power shortages could be easily avoided by simply introducing more renewable energy into the mix.
Mr Turnbull has a different view. He has described the SA 40% renewables push as a “failed experiment” and urged the States to drop their illogical blockers to natural gas development.
Perhaps he should have the last word:
“We are facing an energy crisis in Australia, because of this restriction on gas,’’ he said this week.
“You can have all of the economic mechanisms, market mechanisms, you like. They’re only as good as the assumptions you feed into them. The biggest problem at the moment is the political opposition from state governments to it (natural gas) being explored.
“I again call on the states to lift their restrictions on gas exploration and development.
“Many of those restrictions are in place because of anti-energy activists and their scare campaigns against fracking and energy extraction in general.”