How fake gas frights and fanciful forecasts keep fossil fuels burning for longer

by Michael West | Mar 22, 2024 | Comment & Analysis, Latest Posts

High prices have crushed the consumption of gas, yet government and industry forecasters claim gas use will triple over the next 20 years. Michael West checks out this extraordinary ‘leap of faith’ in the expectations for fossil fuels and the latest gas scare campaign.

The latest data from the Australian Energy Market Operator AEMO shows gas consumption in Australia has plunged over the past five years and this year is tipped to be half the level it was in 2019. Check out this chart.

Source: AEMO Gas Statement of Opportunities

Source: AEMO Gas Statement of Opportunities

However, if you look at the outer years, the market operator is forecasting consumption to rise strongly in the outer years, tripling, in fact, by 2042. Why is this extraordinary? 

Is AEMO ignoring the massive structural shift in the scale and scope of Battery Energy Storage Systems (BESS)? In China, which leads the world in battery technology, and indeed the roll-out of renewable energy, battery ranges have increased 50% over the past year and prices are dropping radically.

While AEMO does incorporate technology in is forecasting it does not appear to be factoring in the massive structural shift in the scale and scope of batteries – we are talking utility scale, behind the metre and in EVs which is likely to lessen the need permanently for methane peakers which play a role in grid firming , particularly in season peaks in the winter months.

AEMO, it should be said, is a quasi-government regulator, a joint venture between the private energy giants and state governments, and its forecasts have proven unreliable in the past, particularly influencing government spending – and therefore consumer charges – in favour of the private electricity distributors and transmission providers.

Gold plating again?

Ten years ago, we exposed the industry for ‘gold-plating’, which cost all electricity consumers thanks to faulty forecasts by AEMO, which claimed ‘peak demand’ for energy was rising when, in fact, it was falling. Are we seeing a reprise, a convenient exercise in optimistic forecasting to influence government decisions as to the approval of new gas projects?

Peak demand for profits is rising

Meanwhile, the lies continue, splashed across the front pages and splattered over the airways.

We’re running out of gas. There will be gas shortages.

How they roll out the big porkies with no shame. Australia exports 5 times the amount of gas we use domestically. We pay the same prices as our overseas customers thanks to Export Parity Pricing in LNG, and yet there is an easy fix to bring down prices. A ‘domestic reservation policy’ to earmark Australian gas for Australians rather than have most of it exported by multinationals for almost no return in tax.

They have been spinning the ‘supply crisis’ spiel for ten years now. In 2013, AGL – which was hyping a gas shortage to win a PR battle and the social licence to tear up prime farmland on the NSW mid coast at Gloucester – got the ball rolling with ‘Gas Supply Cliff’ report. 

The cliff never happened. It was not even a valley. More of a hill really as new gas projects were approved around the country, and as the foreign gas producers ramped up their exports.

We saw the lie again with Santos trying to get its Narrabri project up to frack for gas in NSW. We have to develop it for East coast supply, they claimed. Junior explorers even tried to get the PEP11 gas rig going off the coast of Sydney to Newcastle. The Americans from explorer Tamboran Resources claimed they would supply the east coast too, a convenient story to push its ambitions to frack the Northern Territory.

Domestic reservation policy the answer

Why do politicians believe it all? They are besieged by lobbyists and drenched in political donations for a start. 

It is true that AEMO has warned of supply shortages over winter. It is also true that the greed of the gas giants has been so rapacious that they have crushed demand for their product as households turning away from gas and embrace electrification. And true again that Australia is veritably swimming in gas reserves.

The cartel of Exxon/BHP, Shell, Origin and Santos will hold the market to ransom here again as they sell into the system at peak demand times and charge exorbitantly for that. 

But what a simple fix there is: domestic reservation policy. In WA, prices are lower because they earmark enough for their domestic consumers. On the East Coast, the prices are higher because the fossil media duopoly promotes the industry spin that governments should not interfere in the markets – even to keep their people warm in winter with the essential commodity of electricity … and even when it’s not really a market, but a cartel.

Australia wins plaudits for move on multinational tax dodgers but much more is needed on fossil front

Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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