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Big Gas v The People: acute energy crisis puts Albo straight to the test

by Michael West and Callum Foote | Jun 4, 2022 | Energy & Environment

New prime minister Anthony Albanese faces a heck of a challenge with Australia in the grip of an acute energy crisis. Will the government put people first and tackle the gas cartel, or will they kowtow to their multinational gas donors? Callum Foote and Michael West report.

If Chris Bowen is a “bunny in the headlights”, as Peter Dutton claims, then the Opposition leader and his ragtag crew of Coalition survivors are surely an entire rabbit warren of mangy old critters. They were in government for nine years. They failed. The energy crisis, and it has only just begun, is squarely the Coalition’s fault.

That said, it is now Labor’s lot to fix it and if Labor has a weak spot, it’s gas. Gas prices are going through the roof, gas determines the price of electricity, and the cartel of multinationals which controls Australia’s gas sector is a large donor to both major parties. So, new prime minister Anthony Albanese faces one hell of a challenge straight off the bat. 

In Western Australia gas prices are lower than the East Coast. That’s because WA has a ‘domestic reservation policy’. The state earmarks gas supply for its people, for domestic consumers. People first, local businesses first, multinational export profits second.

This country is the biggest gas exporter in the world. Why then are we paying four times what we ought to for gas? Why is it cheaper to buy Australian gas in Japan, 20,000k away? Why is there no reservation policy on the East Coast?

Because both the Coalition and Labor have swallowed the gas cartel spiel that they should not interfere in *the market*. It’s a tired old neo-liberal mantra, a false narrative peddled by gas lobby toadies in the financial press, because there is no *market* only a cartel of four powerful gas producers holding a nation to ransom.

Nine Lies: how the gas cartel clouted Australia with price rises


We have been harping on about the gas cartel for years here at MWM. Now millions of Australians will be shivering this winter, tucked under their blankets, fearful of turning on the heater lest they are clobbered by extortionate power bills.

These are the facts on gas:

  • Gas is polluting as coal,
  • Carbon capture and storage is not commercially realistic,
  • Both major parties champion huge taxpayer subsidies for gas corporations,
  • Both parties have failed to introduce a gas reservation policy on the East Coast to protect customers,
  • Both parties receive large payments (political donations) from the gas cartel. 


Gas prices in orbit 

According to the Australian Energy Regulator, wholesale energy costs for retailers “have risen by 41.4% in New South Wales, by 49.5% in Queensland, and by 11.8% in South Australia” since last year. 

This is “due to reductions in thermal generation resulting from unplanned outages and higher coal and gas prices, slowing of investment in new capacity, and increasingly ‘peaky’ demand (sharp highs and lows) driving up the cost of wholesale electricity contracts for retailers”.

It is not, as described by the Coalition’s remaining climate warriors, due to increasing renewable energy in the grid. Yet the pain of rising prices will be reflected from now, not only in our power bills, but in rising costs to any business which uses gas or electricity. 

A primary culprit for the price hikes, say independent energy experts, is Australia’s export gas industry. The prices for domestic gas have rocketed. Months ago, gas was trading a $10 a gigajoule. Yet this week, gas prices on the spot market in Victoria reached $800 a gigajoule, a rise of 8000%.

Four big bandits

If this were a “market”, as the gas lobby claims, there would be visibility of prices, bids and offers, and volumes – just like the ASX, just like any market. Instead, it is a cartel of four players BHP-Exxon, Shell, Santos and Origin.  

According to gas analyst Bruce Robertson of IEEFA, “Eastern Australia is the only region in the world that prioritises exports of LNG over the domestic market. It doesn’t even happen in Western Australia. To ensure supply to our domestic market requires a small amount of gas but the gas cartel ensures the domestic market is just “starved” of gas to keep prices nice and high and make super profits”.

In this long form video/podcast with Robertson’s former colleague, Tim Buckley of Climate Energy Finance, Buckley makes the case for a carbon export tax to raise the funds the government requires to address the Coalition’s trillion-dollar debt blow-out and alleviate energy bill pain for customers and business alike.



The domestic eastern Australian market is small.  Over 70% of eastern Australian gas is exported. The amount of gas that would have to be diverted would be very small at less than 1% of the market, supplying domestic consumers does not mean stopping exports, it just means taking a little off the top of the super profits being ripped out of the country by fossil fuel multinationals.

Supplying domestic consumers at a reasonable price of $5-7/GJ (like in Western Australia), says Bruce Robertson, is a normal state of affairs in exporting countries. It is globally unique to Eastern Australia that a big exporter does not have cheap domestic prices”.”

Wholesale gas prices according to the Australian Energy Regulator were volatile across the first quarter of 2022 after hitting a low of $6/GJ in late January, prices ranged around $8-12/GJ, before rising sharply above $12/GJ from the end of March.

A few months ago gas was trading at approximately $10/GJ. This week, wholesale prices in Victoria reached up to $800/GJ – more than 80 times normal levels.

This price crisis has led the Australian Energy Market Operator to step in, temporarily capping prices at $40 a gigajoule until June 10.

According to Nick Hedley, Markets Group, “In Australia, the states that are most dependent on coal and gas for energy (Queensland in particular) have seen the biggest increases in electricity prices. Queensland is behind the curve in renewables, so it’s gone from having the lowest prices in 2017 to the highest in 2022.”

Russia’s war on Ukraine

Experts are in accord in discussing the causes of the energy crisis. According to Lisa Zembrodt, Director of Energy Markets at Schneider Electric: “Australian energy prices are high because of the Russian invasion of Ukraine which disrupted global energy supplies and caused global energy prices to skyrocket as countries scramble to move away from Russia’s fossil fuels.

Australia is the largest export of gas in the world, and the largest exporter of coal, too. Export price parity for LNG has meant domestic prices have risen along with export prices.

“In fact, we export double, perhaps more, what we consume, which means  we have to compete with the international market for coal and gas supplies when supplies get tight. This means we’re paying the international prices.” 

Failing coal fleet

These reasons alone are enough to cause high domestic energy prices. Making things worse is the fact that coal-fired power plants are “out of service in droves”. At present, nearly 30% of Australia’s coal generation has gone offline.

The energy price spike coincides with coal plant owners hoping to exit the market. In February, Origin announced it would shut Eraring seven years ahead of schedule in 2025 because renewable energy was impacting profitability.

Origin is now struggling to secure enough coal to power the plant until then as thermal coal prices have shot so high.

“New outages or extensions of existing outages continue to plague the market this means we need to burn more gas to generate electricity,” Zembrodt says. “So, actually, because we haven’t invested more in renewables, our energy markets are stuck tied to insane international fossil fuel prices. Anyone who says renewables are making wholesale electricity more expensive right now has it all a bit backwards”.

The answers are clear but the challenge for the new Albanese government is political will. Neither of the major parties has shown the courage to stand up to their fossil fuel donors, as yet at least. We need a gas reservation policy for the East Coast, as well as a super profits or carbon export tax.

Fossil fuel giants, such as Exxon which racked up $70bn over 7 years in total income without paying a cent in tax to the ATO, are paltry tax payers. Worse, they are aggressive tax avoiders. The government needs to act. It is simply not acceptable that Exxon pays less tax than the average Australian worker, is a massive carbon emitter and this year will record billions in extra income – funnelling its super profits offshore – while Australians suffer from rampaging energy bills.


State Capture: top corporations identified as members of both Liberal and Labor parties

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.

Callum Foote was a reporter for Michael West Media for four years.

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