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All of a sudden energy from the sun and wind is looking very affordable

On 30 April, less than a month before the election I penned this piece, about the foreshadowed spike in energy prices, about to hit Australian consumers: Coalition promises higher electricity costs!

I wrote it because it was quite clear that the Coalition were not going to come clean before the election and it was a known major factor that was going to hit Australian businesses and consumers as winter came on.

The prices for coal, gas and petroleum products are all being hit largely due to the Ukraine war, the sanctions placed on the Russians, profit gouging by OPEC and, in the domestic context, a complete malaise on energy policy over the ten years of Coalition rule.

Clearly, we can’t do much about the supply of petrol and diesel products as we are wholly reliant on offshore producers and refiners and OPEC have told the world that they will not be increasing production to ease the shortages. However, we could start by accelerating the transition to electric vehicles now that we know that the man, who said they wouldn’t tow your boat or get you and your family to your favourite camping spot, was lying.

In the meantime we still need petroleum products to get us through the transition.
Interestingly, Venezuela holds the planet’s largest reserves of untapped oil but that won’t help us as the US have sanctions on the Venezuelan government – evidently they don’t like President Nicolás Maduro. Another fun-fact: Iran holds the world’s fourth-largest oil reserves but their exports are also under US bans and sanctions for much the same reasons.

As regards coal and gas, we are major producers of both and we have the ability to reserve or hold back a portion of our production for domestic consumption at prices that are not determined by world market fluctuations. Something that is obviously necessary until we can break the grip of fossil fuels and replace them with price-stable renewable resources – Vladimir Putin does not control the supply of sunlight or wind although he may think he does.

In the UK the conservative government has imposed a twenty-five per cent’ windfall profits tax’ on oil and gas companies. A windfall tax being a one-off tax imposed by a government on producers and suppliers who, through no effort on their part, were lucky enough to benefit from something they were not responsible for – in other words, a windfall profit.

Our gas and coal producers are also in the fortunate position of being recipients of these windfall profits due largely to geopolitical happenings in other parts of the world: the question is, should they reap these windfall profits and should we be funding them?

The former Coalition government knew that this supply and demand price crunch was coming, it’s been forecast for over twelve months, but they suppressed the release of information because it didn’t fit with their election narrative and apart from that they love to see ‘can do capitalism’ in action. From comments made by the new leader of the Coalition, they will now be using these price spikes to attack the new Labor government for incompetence in office even though, you will note, the new government were only installed a matter of days ago – that’s Voldemort for you.

You may recall that the Gillard government enacted The Minerals Resource Rent Tax (MRRT), a tax on profits generated from the mining of non-renewable resources in Australia. It was a replacement for the proposed Resource Super Profit Tax (RSPT). The tax, levied on 30% of the “super-profits” from gas production and the mining of iron ore and coal was introduced on 1 July 2012.

The Coalition, led by Tony Abbott, went to the 2010 and 2013 elections promising to repeal the tax. They considered the tax to be the actions of a socialist regime and when they won office at the 2013 election the tax was repealed. I wonder what they now think of Boris Johnson’s actions with his windfall profits tax which, is essentially the same thing?

Surely it is time that we had some coherent taxation laws governing the extraction and sale of our non-renewable resources until such time as we can put in place reliable renewable energy infrastructure, which will not be subject to geopolitical price manipulation. We need to ensure continuity of price-stable energy rather than pandering to the multi-national mining conglomerates.

I have a great deal more confidence that the new Albanese government will do this contrasted with the flashmob we have just cartwheeled out of office – don’t let us down, Albo!

 

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10 comments

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  1. Phil Pryor

    Tax foreign corporations operating in Australia, especially in non renewable mining, until their piles are bulging, piles of money of course, money cunningly, imperiously, crookedly, siphoned off from a land whose citizens need it and deserve it. Learn from intelligent political leadership that is less bribe prone, e g, Norway. The Abbott to Morrison regimes were utter financial filth.

  2. Williambtm

    Thank you, Terence Mills, for another excellent article. Thank you, Phil Pryor, for your hugely relevant comment.
    I begin my responding comment with the fact that the USA is responsible for this new form of chaos thrust upon people worldwide.
    Firstly, the War in Ukraine is a proxy war as the USA Vs. Russia.
    Never forget that the USA is the viper.s pit in which each of the wars around our world is architected by the CIA & Pentagon war dog Generals.

    In 2014, the USA had encroached on the political landscape to begin its molestation of Ukraine.
    The USA intervention in that country’s leadership brought Petr Poroshenko into the role of president of Ukraine.
    Recall all the unrest upon the arrival of Poroshenko as the new Ukraine President; this same rodent had long had his hands in the Ukraine cash register.

    Even Australian-owned fossil-fuel corporations are enemies of the Australian people.

    https://en.wikipedia.org/wiki/Woodside_Petroleum#Sunrise_LNG_development

    The USA had for many years wanted an alliance with Ukraine, as this country has the most extensive border between it & Russia.
    Not forgetting the USA had long prized the country of Ukraine as a strategic military partner and as a bulwark against Russia.

    We now turn to the latest news relating to the excessive shift in the world’s fossil fuel energy prices; it means nothing to the USA,
    they are invincible when it comes to enormous rises in domestic costs; it’s just a matter of printing more USA fiat dollars.
    The nation lives on a giant America Express card that has no limit.

    IN Australia, the USA corporations, E.G., Chevron have control of Australia’s gas resources and continue to flog Australia’s gas resources, mainly to China. The Yank corporations have become the middleman in selling our gas resources.

    One must keep a sharp on Australia’s Federal government as they are not the true-blue people’s government that they may claim to be.
    After all the years of the fukktard Liberal/National party government, beginning with the most treacherous lying bastard Johnn Howard.

  3. Albos Elbow

    Imagine if Tawney Rabbitt didn’t win the election and Julia Gillard was able to continue on the road to renewable energy and structured carbon levies.
    Imagine if Australia was now 80, 90 or even 100% renewable energy with a majority of electric vehicles.

    Australia would be a much better place to live with low energy prices, low inflation, lower cost of living, a higher standard of living looking forward to a brighter, greener future for our children and grandchildren.

    If this isn’t the final wake up call to ALL Australians, then it will never happen.
    We will continue to be at the behest of corrupt media and fossil fuel billionaires and politicians, who don’t care if they destroy our planet forever.

  4. wam

    Albo knows it is time for widening the tax system and medicare levy but he needs to check his involvement in the coal and gas exports for labor involvement. Whatever, the lying rodent got a second term before GST(cost me $C). Ergo, Albo cannot move on tax till a mandate in ’25. ps Imagine if boobby didn’t vote the bipartisan action down? Rudd may have not been axed.
    He and gillard may have ruled and swapped a la hawke/keating?

  5. Eddie

    Foreign corps are given access to export gas resources, paid for with crumby royalties (sometimes cancelled by ‘royalty holidays’) and exploration lease fees (mainly clawed back through tax arrangements). So, who are the biggest idiots – foreign resource corps or the Aussie Aussie Aussie Oi Oi Oi gov of the day? In 1972 PM Gough Whitlam tried to end foreign control over Aussie natural resources. 50 years on and only WA has a gas reservation policy. The political management of this country is a joke.
    Re the place of renewables in this ongoing farce of trying to keep the economy afloat as our gov effectively gives our resources away for free, check out ‘Planet of the Humans’ doco on YouTube.

  6. New England Cocky

    I agree with so many of the excellent responses to this excellent article that I am left without words.

  7. Albos Elbow

    Why are Australian taxpayers still paying fossil fuel companies $12 billion a year in subsidies amidst opportunistic record profits? https://australiainstitute.org.au/post/australian-fossil-fuel-subsidies-surge-to-11-6-billion-in-2021-22/

    The first thing they should do is phase out the subsidies and spend it instead on upgrading the grid and renewable energy transformation projects over the rest of this decade.

    The voters have made it clear what they want.
    Its only fairer and better use of our scarce resources.
    It only takes a little political courage to do it, while the benefits are enormous.

  8. Harry

    Sensible article Terence! I think Labor under Albanese has its heart in the right place with nuanced, practical policies. But I fear a hell of a fight will be needed to stop the usual media and political suspects and vested interests.

  9. Albos Elbow

    Due to increased demand for renewable energy, the volume weighted avge cost of wholesale renewable energy in NSW has gone up from 7.7c to 8.1c per KWh, but its still a hell of a lot cheaper than what you will be paying retail price for energy after 1 July 2022. https://www.aer.gov.au/wholesale-markets/wholesale-statistics/annual-volume-weighted-average-30-minute-prices-regions

    Now is the time to get into buying wholesale renewable energy from a community based energy company like localvolts. As more and more people join the peer-to-peer energy community and more renewable energy comes onto the grid, you will save more and more on energy, compared to what you will pay for retail coal, oil and gas generated energy.

    For more information please visit the localvolts.com website or contact info@localvolts.com or joe@localvolts.com and get started on saving hundreds of dollars on your energy bills, reducing carbon emissions and helping move to net zero sooner.

  10. Albos Elbow

    Fossil fuel subsidies cost $11.6 billion in 2021-22 across all federal, state and territory governments, equivalent to $22,139 per minute.
    This marks a $1.3 billion (12%) increase on the 2020-21 total of $10.3 billion. States and territories actually reduced subsidies by $214 million but this was outweighed by a $1.4 billion increase from the Federal Government.

    The total value already committed in federal, state and territory budgets is $55.3 billion, which is 11 times the balance of Australia’s Emergency Response Fund ($4.8 billion in Dec 2021), while $11.6 billion in 2021-22 is 56 times the budget of the National Recovery and Resilience Agency.

    Fossil fuel subsidies cost the Federal Government $10.5 billion in 2021-22, $1.4 billion more than 2020-21.
    These subsidies cost the Federal Government more than it spent on public schools in the same year ($9.7 billion).
    The largest subsidy is the federal Fuel Tax Credits Scheme, at $8.07 billion, which exceeds the $7.5 billion spent on the Australian Army.

    Federal
    Building the Kurri Kurri Gas-fired power station ($200 million).
    Concessional finance for Olive Downs coal mine ($175 million).
    Road construction for fracking in the Northern Territory ($173 million).
    Capital investment in Hunter Valley coal railway network ($161 million).
    Queensland
    $50 million to upgrade rail lines given “interest in developing substantial coal deposits in the Northern Galilee Basin”.
    $50 million for the Meandu coal mine that feeds state-owned coal-fired power stations.
    $72.5 million allocated to upgrading Callide and Kogan Creek coal-fired power stations.
    Northern Territory
    $2.8 billion committed to gas purchases for loss-making Power and Water Corporation.
    $720 million committed to gas transport.
    A $400 million ship lift partly to service the oil and gas industry.
    Western Australia
    $571 million has been allocated to building or upgrading gas and coal-fired power stations, with $59.5 million to be spent in 2021-22.
    Another $500,000 to Chevron’s Gorgon CCS project, which has already received $60 million from the Federal Government and has never operated to approval requirements.
    State-owned port authorities allocated $31 million in 2021-22 and $179 million in capital works that at least partly benefit the oil and gas sector.
    Victoria
    Brown coal to hydrogen project received $13 million in state funding in 2021-22, part of $100 million committed from Victorian and Federal Governments.
    $66 million for the program that oversees the CarbonNet CCS project, still not operational 12 years after its establishment.
    New South Wales
    $26 million for abandoned mine rehabilitation including coal mines in the Lower Hunter.
    The Coal Innovation Fund spent $9.9 million in 2021-22 and has a balance of $70 million.
    South Australia
    $19 million in the 2021-22 budget to upgrade an oil jetty largely used by Santos, part of a total estimated cost of $57 million.

    Tasmania and ACT who are 100% renewable energy
    No fossil fuel subsidies identified.

    We must move to renewable energy ASAP.

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