Coal, gas plan merges stupidity and lunacy

There’s zero guarantee that the coal price cap will have the slightest positive impact on electricity prices.

The Albanese-Bowen-Chalmers plan to cap the prices of coal and gas – and hopefully, very hopefully, your electricity bill – is short-term stupidity wrapped up within long-term lunacy.

The stupidity is the belief that capping the price of an input – coal and gas – will necessarily cap the price of what comes out the other end – electricity.

That shows zero understanding of how the electricity market actually works and even less understanding of reality.

It also reveals the damning consequence of the intersection of a trainee treasurer with an inept treasurer secretary – the secretary who managed to turn a very good (and necessary) idea in JobKeeper into an appalling and damaging waste of tens of billions of dollars.

The long-term lunacy Is of course the – disgracefully and depressingly – bi-partisan commitment to net zero: the total elimination of the use of fossil fuels: coal, gas and oil.

So we have the lunacy of a determination to utterly eliminate any and all use of coal and gas married to a stupidly desperate attempt to promote as much use of coal and gas as possible.

While at the same time doing everything humanly possible to prevent any increase in supply – of that coal and gas.

It’s almost as if we have a treasury and a treasury secretary who have never heard of the most basic law of economics – that of demand and supply. When demand exceeds supply the price goes up. To sustainably cut the price, you boost the supply. Nowhere in this multi-billion dollar package is there the slightest effort to increase supply.

Worse, so mind-bogglingly ineptly worse, the package is actually ‘designed’ to encourage less supply, while at the same time aiming to boost demand.

As a producer, you sell the coal and gas internationally, you get the highest possible price. You sell it locally, the price is capped.

Hmm, gee, I wonder where I will prefer to sell it. Especially as I am not allowed to actually produce more: that’s an earth-frying no-no.

To describe the whole awful concoction as mind bogglingly chaotic, incoherent and utterly inane would be too generous.

Notice also, how it’s going to do four-fifths of five -eighths of copulating all for your gas or electricity bill anytime soon.

According to our esteemed trainee treasurer, gas prices were going to rise 20 per cent this financial year, through to the end of June. After the package they will ‘only’ rise by 18 per cent.

Similarly with electricity. Next year prices will ‘only’ go up by – another – 23 per cent instead of 36 per cent.

Whoopee! We will all be breaking out the French champagne, drinking endless toasts to the lanky Queenslander.

Aha, but next year, 2023-24, Treasury tells us that instead of gas prices going up another 20 per cent, the price cap will hold the increase to only 4 per cent.

So, first note the bait and switch. There’s no price cut in there, just a – promised – smaller price hike. Gas prices will still exit 2023-24 some 25 per cent higher than they were; electricity 24 per cent higher.

But that’s in theory. There’s zero guarantee that the coal price cap will have the slightest positive impact on electricity prices.

Indeed, it’s far more likely to perversely force them even higher than they would have been without the blundering politicians and inept bureaucrats.

You’ve just gotta love the exactitude. Prime minister Albanese promising it would deliver $230 to the average household.

Not $229 or $231, or even $225-230, but exactly $230. And not this year but next year.

This from a treasury which told us before the election (and after Ukraine) that the budget deficit this year would be $78bn, and after the election that it would be just $37bn.