It is good to see the amount of money gained per employee being referred to. This is the only way the average non-employer will be able to get an inkling of the costs and benefits of employing people: how much they bring in, less the cost of what they are paid. All workers are 'costs’ of doing business, just like raw materials. If you don't make more out of them than you spend on them, you don't make a profit, and you shut up shop. And, in Australia, the cost of labour is high. This 'living wage’ nonsense of the Left must be knocked in the head. All workers must produce a profit. That's why people working in the public sector are a dead weight, even though they are necessary. Big government is all loss.

This really is inane.

We are about to become the world's leading gas producer yet we are domestically paying some of the world's highest prices.

Sure "the US has a very active shale gas sector, producing masses of LNG." but it also had a ban on the export of natural gas in place until very recently which helped drive down prices and secure cheap energy for its businesses.

We need to greatly strengthen domestic reservations rather than have to squabble over chump change scrambling to frack our way across our farmland with projects only viable because of poor management of our sovereign resources.

Graham, why have you ignored the biggest source of the price difference?

The USA reserves a proportion of its gas for domestic consumption. Australia (or at least eastern Australia) does not, so domestic consumers pay international prices.

Of more interest, when looking to the future, is how can we avoid the need for so much gas. How much can kiln efficiency be increased? How much gas (and how much cost) can be saved by taking advantage of cheap electricity at times when the wholesale price is low (bearing in mind that these times are likely to get more frequent as more solar panels go up)? How competitive with bricks are stone blocks, and how much scope is there for reducing the price of those?

Note SR the lefty bureaucrat at work.

"Lets bring in some more restrictive regulations", to limit companies profits & freedom to operate in the share holders best interest.

What ever you do, let's keep the ratbag greens happy by restricting gas extraction. Don't under any circumstances let companies go for maximum production, & bring the price down, by supply & demand, as has fracking in the US.

While he's at it, he tries to use a red herring of export restrictions, when the cost reduction is supply, with restrictions removed.

One day some of these people will actually tell the truth, & many will pass out with the shock of it.

Dear Hasbeen,

Lol. You really don't have much of a grasp on this do you.

So the US always had an abundance of gas production even before the fracking boom delivering almost the same British Thermal Units (BTU's) as coal production. Coal has since declined significantly as fracked gas replaces it.
http://www.eia.gov/todayinenergy/detail.php?id=35532

But the US had restrictions in place that kept exports of natural gas to less than 5% of production meaning cheaper supplies for its industries. Even now that some of those restrictions have lifted it only represents 10% of production.

Here in good old Oz pretty well 2/3rds of our production heads overseas which is increasing all the time. As a result the Brisbane spot price for LNG raced past the Asian price for the first time last month. This is despite of the state accounting for 34% of the country's gas production well above the other Eastern seaboard states, yet your price is the highest. Why do you think that is so?
http://rogermontgomery.com/wp-content/uploads/2019/04/Screen-Shot-2019-04-11-at-10.31.19-am.png

So when you infer what the US did was “limit companies profits & freedom to operate in the share holders best interest.” what you are saying is that they were wrong to to look after the country's interest before that of shareholders, many of them overseas investors.

Who are the stupid ones? The Yanks or us?

You really don't care one jot about struggling Australian businesses paying top dollar for a resource we have an over abundance of do you. You seem to have a pathological disregard for ordinary Australians over the interests of shareholders and it shows.

Hasbeen,
Whether or not you support copying the "lefty" policies of the USA, it's clear that those policies have brought them some significant advantages. Your claim hat export restrictions are a red herring is absolutely ludicrous. Without any export restrictions the domestic price will be determined by the international price NO MATTER HOW MUCH PRODUCTION IS INCREASED.

Whether the benefits of cheaper gas on the domestic market really outweigh those of getting the best price is a complex issue. But the arguments of both sides deserve to be heard not belittled.

Come on fellers, stop coming the raw prawn.

The high cost of gas in Victoria & NSW is due to their governments moratorium on exploration for gas, & the extraction of known reserves in those states. You know it, I know it, & anyone with a brain & a bit of interest knows it.

I haven't bothered with the story in that failed state South Australia, but I think it applies there too.

There is plenty of gas available in Victoria, & the coal seam gas in their brown coal would generate cheap electricity for the state if allowed.

Put the blame where it belongs, government policy,. trying to buy a few green preferences, & the ratbag greens who cause the problem.

The heading of this article and its immediate change of direction in topic, actually belies the true nature and overall damage to society, unfettered globalism and its neoliberal economic policies have inflicted.

A country now, where politicians have their head stuck in a Thatcher sand dune, with posteriors pointing to the bulging bank accounts of themselves and their mates, is, for almost a majority left behind by it, a blinding failure.

Why the concern now with local industry?
For the above suffering group locked into poverty, and the grind of multiple low paying jobs in the service industries; all that remains for a near majority, is more of the same: An outcome most assured in the coming election.

It's also a myth to blame Liberals totally, for the decline of unionism, the historic friend of the worker, and the bastion of a fair go, and a redistribution of wealth towards progress, for the class most disaffected by the collapse of local industry, it was Labor. A Labor distaste for the deplorable class, it did its utmost in creating, is currently prefixed by a truely deplorable scum-bag, a master of treason, Shorten.

A vote for that? Not in my ant nest!

Until recent times, Australia's great comparative advantage in regards to manufacturing has been low energy costs. A decade ago, our electricity costs were at or near the lowest in the world and this translated into swathes of manufacturing industries taking advantage of that factor.

But after being bitten by the great Global Warming bug, governments of both persuasions have frittered away that comparative advantage and industries, one after another, have succumb. To be fair, those who perpetrated this disaster didn't do it knowingly. They were convinced by so-called experts that the costs of fighting the CO2 demon were relatively light. Remember Rudd saying that it would cost the equivalent of a cuppa a week?
We are still being assured that the experts have the answer to lower electricity costs and the leadership remains desperate to be beguiled.

That manufacturing is falling off a cliff can hardly be denied. Over the past 5 years, employment in manufacturing has declined by 10.6% (most of that in the past year) while total employment has rises by just under 10%. Consequently the proportion of manufacturing employment in the economy has fallen from 7.8% to 6.7% or by 17%. And all of that is accelerating.

Its feasible that a nation can survive or even prosper without having a viable manufacturing sector (eg Singapore) but such a nation doesn't need and can't afford a massive immigration programme. Indeed immigration is sold as being something we need to remain prosperous. But if our wealth is derived from mining and agriculture, then raw numbers of people aren't required.

/cont

/cont

The political classes have a tiger by the tail. They can't afford to renounce the jihad against CO2 which causes the decline manufacturing but equally can't afford to draw the obvious conclusions that a nation based on primary industries doesn't need a large population. So they avoid addressing either and kick the problems down the road.

A reckoning will come especially as we seem to be also now turning against those very same primary industries that are the only thing allowing us to retain a first world standard of living. That we suppress a fracking revolution even while the USA remakes itself on the back of that same fracking is indicative of how insane our policy contradictions have become.

The reckoning will be painful and it will come, when it comes, with a rush that will create massive cleavages in society. Already we are seeing an election being fought over the current pie rather than one arguing how to increase the pie. As things unravel, there will be battles over how the pain is to be distributed.

We avoided becoming the poor white trash of Asia once. I'm not sure we'll be so lucky this time.

Hasbeen?

Seriously? YOU think I'M coming the raw prawn?

Supposing all restrictions on gas extraction were lifted, but no export restrictions were imposed: do you think that would result in the gas companies selling the gas here for less than they can get for selling it on the export market? If so, why?

Why is it so hard for you to comprehend that the answer that seems obvious is not always correct?

BTW there's plenty of fracking done in SA, despite there currently being a moratorium in part of the state's southeast because of valid concerns about the impact on groundwater.

We avoided becoming the poor white trash of Asia once. I'm not sure we'll be so lucky this time.
mhaze,
You're on the nail there ! Even the education Dept is working towards that outcome. If Labor/Green/utter Left get in, it'll be completed !

Aidan: How much gas (and how much cost) can be saved by taking advantage of cheap electricity at times when the wholesale price is low (bearing in mind that these times are likely to get more frequent as more solar panels go up)?

Tragically, the time for taking advantage of cheap electricity in Australia well and truly passed when our politicians foolishly promoted the change to uneconomic, unreliable, intermittent weather-dependent renewables at the expense of low-cost, reliable coal-fired power.

Australia will pay dearly for the shortsightedness of our misinformed politicians. As more coal-fired power is shut down, disinvestment in our industries and consequent substantial loss of job opportunities are bound to follow.

Raycon, you're copying Hasbeen's mistake of assuming the simplest explanation to be true even though it doesn't actually fit the facts.

There's still ample scope for taking advantage of cheap electricity in Australia. Earlier today the wholesale price of electricity in SA was below zero. It's since risen to 28c/kWh before falling back to around seven. It is forecast to fall below zero again tomorrow. As more solar panels and wind turbines are installed, we can expect to see electricity wholesale prices fall further, and as more batteries are installed we can expect to see the price become less erratic.

We did have cheap power all the time once, but even if you ignore the externalities, the age of coal power being cheap is drawing to a close. Policy changes and privatisation extended it as the plant owners were able to sweat existing assets, but there's a limit to how long they can do that profitably. Power from gas also used to be cheap but it isn't now - in addition to the higher gas prices because of exports, the generation companies have far too much market power, and keeping supply constrained is the most lucrative strategy even though it's the opposite of what would bring the most public benefit. And the government fools people into thinking renewables are to blame for this.

Solar and wind power used to be very expensive (though efforts to pay for them only made up a small proportion of electricity bills). But now with experience, technological improvement and economies of scale, they've become cheaper than coal. Alas doing nothing is still usually the most lucrative option for the power companies.

Yes Aidan, not only a raw prawn, but a very stupid raw prawn.

Give companies access to the resource & let them produce & they will produce & supply for any price that is profitable. Give then enough & they will supply you at ate lowest possible price. It is idiotic to refuse to allow your own resource to be harvested, then expect to force companies operating in other jurisdictions to supply you at a price you prefer. If you won't use your own, you have no right to expect discounts from others.

You obviously prefer the bureaucratic, socialist, communist approach of dictating markets & controlling markets & suppliers. You don't want the stuff extracted, but want to restrict companies extracting in other jurisdictions to suit your stupidity.

I doubt there can be a more ridiculous approach to resource use. Have you ever thought of growing up & joining the real world?

Dear Hasbeen,

You wrote;

“Give then(sic) enough & they will supply you at ate(sic) lowest possible price.”

Australia pays more for its own LNG than Japan. The corporations which you are so busy singing the praises of have reemed this country while blokes like you applaud them for ripping us off. We have had a whole suite of politicians so beholden to mining industry donations just let them do it.

Are you really this thick?

This is the real world mate.

“Australia is on track to eclipse Qatar as the largest exporter of gas by 2020, but is expected to only earn $600 million in 2018 - the same amount of revenue the government earns in beer tax every year - compared to Qatar's $26.6 billion.”
http://www.smh.com.au/politics/federal/staggering-90-billion-lost-in-resources-tax-20180305-p4z2uv.html

Tell you what, what if the 26 billion dollars we are foregoing to help your corporate mates was instead used to subsidise cheaper gas prices for our industries would that make you happier?

Aidan: … you're copying Hasbeen's mistake of assuming the simplest explanation to be true even though it doesn't actually fit the facts.

The facts are that dozens and dozens of new coal-fired power stations are being built around the world.

You should have realised by now that the cost of electricity rises with increased penetration of weather-dependent renewables -- that has been the experience in the rest of the world. That will become even more pronounced in Australia with higher penetration of those renewables.

Let's hope you do not own shares in the producers of allegedly negatively-priced wholesale electricity.

Wow, Hasbeen, I hadn't realised you were that ignorant of how businesses operated!

They aren't content to make a small profit; they try to maximise their profits. They won't supply the domestic market with gas for less than they can sell it for to international buyers (when the transport costs are taken into account).

Indeed if a business is content to make a small profit rather than trying to maximise its profits, it becomes a takeover target. We've seen this happen in the gas industry in 2008 when BG (which has since been taken over by Shell) tried unsuccessfully to take over Origin Energy then successfully took over Queensland Curtis LNG.

Are you suggesting we should try to expand the gas industry so much that we bring international prices down in order to make domestic gas cheaper again?
If so, you should be aware that we don't have an infinite supply of it, and dumping it all on the international market now will mean it won't be available for future generations.
But if that's not what you mean, how do you imagine abolishing restrictions would lead to lower domestic prices rather than more exports?

>It is idiotic to refuse to allow your own resource to be harvested, then expect to force
>companies operating in other jurisdictions to supply you at a price you prefer.
Huh? You seem to be implying that we're not allowing our gas industry to develop, and that I'm suggesting trying to force companies to import gas at less than it's worth!

We're not refusing to allow our gas to be harvested; our industry is big and still expanding, and we're one of the world's biggest gas exporters. We could, if we wanted to, impose some export restrictions to make domestic gas cheaper, as the USA has done. A few years ago I opposed this; with hindsight I think I was wrong, and I support it as a short term measure.

As for your ludicrous assumptions about what I “obviously prefer”, they're too stupid to reply to now, but I may respond later.

SR, Aidan, what utter garbage.

Give a company enough resource & they will produce enough gas to supply every profitable market. They will obviously supply the most profitable markets first, then keep extracting more for less profitable markets as long as it was profitable to do so.

I guess you are suggesting companies supply at a loss with your attitude.

Aidan, both NSW & Victoria refuse to allow any new gas extraction. I am not suggesting this, it is fact.

Yes we are big gas exporters from the north west shelf. This gas is sold very cheaply under contract. The contracts were needed to enable the borrowing to establish the facility. With out forward long term contracts the gas fields would never have been developed for harvest. Even today, our domestic usage is not large enough to justify the development of the fields.

We also export some other gas, & have recently started to establish the export of Queensland coal seam gas.

Victoria has enough coal seam gas in their brown coal, now siting uselessly in the ground after the closure of Hazelwood Power Station to supply Victorian requirements for decades, but won't permit it to be extracted. Buying idiot green votes as usual.

If we don't export our gas, coal & Iron ore, there would not be enough foreign exchange to afford the computers you are typing such garbage on. If you don't understand these facts, do try to do a little research sometime.

Raycom,
Firstly, apologies for getting your name wrong last time.
Secondly, it's true that there are still coal fired power stations being built. But it's no longer the cheap source of electricity it used to be.

Have a look at http://www.smh.com.au/environment/climate-change/peak-coal-in-sight-as-new-power-stations-drop-and-retirements-jump-20190327-p5186m.html
The coal age is nearing its end. Only China is still increasing its coal fired capacity in large amounts, and that's for political not economic reasons.

_______________________________________________________________________________

Hasbeen,
>I guess you are suggesting companies supply at a loss with your attitude.
That conclusion is just a product of your own idiocy - it can't be logically derived from anything I said, nor indeed anything Steele said.

It;s true gas from the NW s sold very cheaply under contract. Until recently a lot of gas was sold in the eastern states under contract as well, and when the contracts expired, gas users had to pay higher prices.

But gas producers have realised their mistake, and prefer to sell gas at the market price. And that's an equilibrium. Were it not for the cost of transportation, every market would pay exactly the same price and be equally profitable. Transportation costs mean there's a small price difference, but it stays small. If international gas prices rise, there will be a similar rise in domestic prices. And with unrestricted exports, increasing production will not prevent this.