Last week, News Corp ran a swathe of gas-industry-sponsored content across its tabloid front pages, but a new report has honed in on what it says are some of the facts the industry would rather keep quiet about. Zach Szumer reports.
Since Australia started exporting Liquified Natural Gas (LNG) in 2015, gas prices in eastern states have tripled while demand has dramatically dropped, according to a new report by The Institute for Energy Economics and Financial Analysis (IEEFA). They say their findings are what the Murdoch papers don’t want to say about the gas industry.
On Monday last week, News Corp tabloids across the country simultaneously ran front-page stories warning Aussies of higher bills and blackouts unless domestic gas shortages were addressed. Fairly standard fare, as far as Murdoch rags go.
Readers didn’t discover until they’d flicked to the inside spread of this “special report” that this was all content sponsored by companies like Santos, Tamboran Resources and the China/Singapore owned pipeline group Jemena.
It was just the beginning of a week-long series explaining the critical importance of “stepping on the gas” – i.e. slashing red tape to expand gas production – “to head off a crisis that also threatens to drive jobs offshore and trash the transition to renewables.”
While the stories printed in the first day’s foldout didn’t shy away from mentioning the rising price of gas, there was no suggestion of any link between this, or any demand shortfalls, with the beginning of Australia’s gas exports in 2015.
This is a crucial omission, the authors of the IEEFA report say.
Gassed-up prices, slumping demand
IEEFA’s Australian gas finance analyst Kevin Morrison said the tripling of prices since exports began is
due to the stronger linkage between LNG export prices and domestic gas prices.
“Correspondingly, the largest gas use reductions came from the electricity and manufacturing sectors, which tend to be more price sensitive,” Morrison said, adding “Prices are likely to remain higher than pre-2015 levels for decades.”
Meanwhile, since peaking in 2013-2014, demand for gas in the eastern states has fallen by 32%, the report says.
Explosive FOIs – gas cartel conned Government, fixed high energy prices for all Australians
Over the same period, the amount of gas used in power generation more than halved from 11.5% to 5%, as the share of renewables almost quadrupled from 10.4% to 38.1%, the report found.
“Meanwhile, the evaporating gas demand has largely been absorbed by the gas industry itself, as 8-10% of the gas used to make LNG is consumed in the liquefaction process and in piping the source coal seam gas (CSG) hundreds of kilometres to LNG export facilities,” the report read.
Australia-wide, LNG production is now the largest user of gas, ahead of electricity generation and manufacturing.
Source: IEEFA
IEEFA Australia chief executive Amandine Denis-Ryan highlighted that gas production in eastern Australia had risen 2.8 times since LNG exports began, “This means the increase in total east coast output has effectively been directed to the three Queensland LNG export plants, given the decline in domestic gas use.”
The News Corp papers did accurately report an ACCC report from July found that the East Coast could face potential gas shortages by 2027, but there are plenty of experts who don’t think the answer is to ‘step on the gas.’
However, you can almost set your watch by News Corp running editorials with headlines like ‘Drill Baby, Drill’ every time the ACCC or any energy market body makes even the slightest warning of potential shortages.
In the case of their latest round of insufficiently labelled advertorials, it’s clearly a case of he who pays the piper calls the tune.
Zacharias Szumer is a freelance writer from Melbourne. In addition to Michael West Media, he has written for The Monthly, Overland, Jacobin, The Quietus, The South China Morning Post and other outlets.
He was also responsible for our War Power Reforms series.