The Australian Workers Union’s new National Secretary Scott McDine is right to identify energy security, and its direct link to the economic fortunes of his members, as a critical challenge (Howes successor gets real 12/7). However Mr McDine should pause to consider what is actually happening in both the local and global energy landscape, before prescribing a preferred solution.
Mr McDine, and all other gas reservation enthusiasts, should take the time to read The International Energy Agency’s Gas Medium-Term Market Report 2014 released only last month, which clearly shows how and why interfering in gas markets deters investment in exploration and production. It baldly concludes: “Subsidies exacerbate demand and inevitably lead to shortages a decade later”.
And contrary to Mr McDine’s assertion, the United States does not have anything like the protectionist policy he endorses. Far from hoarding gas for subsidised manufacturers, the US is rapidly developing a gas export industry that is directly competing with Australia’s to fuel Asia’s surging energy demand.
The key to bettering the competitive position of Mr McDine’s members is held by state governments in NSW and Victoria, who are today inhibiting the gas industry’s capacity to respond rationally to rising gas prices, via the production of more natural gas supply.