Our politicians are playing blackout roulette

The only things standing in the way of a US-style boom in Australia is poor leadership that restricts new energy supply.

The only things standing in the way of a similar Trump-like boom in Australia is bad political leadership. (Photo by Mark Kolbe/Getty Images)

Australia is doing all the right things to create the environment for a Donald Trump-style leader to take control of a state or two and possibly the Commonwealth.

The latest energy warning by major groups ranging from the Business Council to the ACTU underlines where we are headed.

Currently the big states look with amusement at the self-inflicted blackouts in South Australia and ignore the fact that both NSW and Victoria have government and opposition parties that are prepared to play blackout roulette once Victoria’s Hazelwood power station is closed.

And when Sydney or Melbourne is blacked out, the politicians in charge at the time will have a million excuses but, as in South Australia, todays leaders will be totally to blame, and the voters will know it.

And like it or not (and you are entitled not to like it) Donald Trump’s policies are driving the US sharemarket higher and higher while Australia’s looming energy chaos is a key driver causing our sharemarkets to languish.

Not surprisingly, our largest non-bank company, BHP, is taking $2.8 billion of its Australian iron ore cash and investing it in a US oilfield.

Chairman Jac Nasser and chief executive Andrew Mackenzie were both briefed by Donald Trump prior to inauguration about the looming US tax cuts and were encouraged to invest big sums in US energy production. BHP will do just that because Trump has set the rules to encourage investment. The sharemarket believes that BHP will be joined by countless other companies investing in the US.

We are looking at a revival of US manufacturing, not just because of Trump, but because the technology of automated manufacturing changes the economics.

The only things standing in the way of a similar boom in Australia is bad political leadership and the fact that our rising population and Chinese investment have creating a housing boom, which obscures the energy-related capital investment strike. Australians are pouring their savings into dwellings because, as they see it, dwellings are the only investment that makes sense.

What would a Donald Trump do if he or she got control of a major state or the Commonwealth? They would strip away all the non-safety regulations that stop energy production — whether that energy is coal, oil, gas, nuclear or renewables. And a Trump style leadership would back the production of extra energy by ensuring massive investment in energy transportation infrastructure.

But what about carbon emissions and global warming?

The simple fact is that if carbon-conscious politicians cause an energy shortage and/or huge price hikes then angry voters will throw them out just as they did in the US. Carbon no longer has the same priority when poverty takes over as happened in Middle America.

So if our current political leaders want to cut emissions and avoid a voter backlash, then they need to stop playing energy roulette: Here are a few suggestions:

• You can’t create massive renewable power and ensure power reliability unless you have a really reliable and quick acting back up should climatic conditions change. That was the South Australian mistake. The Scandinavians understand this and use hydro. We could do the same thing, except the greens would go bananas.
• I understand clever power networks can store power. It takes investment but we have the capital.
• Then there is gas which can provide base load for renewables but we are stopping the development of new gas fields. Victoria has a massive non-fracking gas field which would give NSW and Victoria the gas they need to both back up renewables and lower the gas price. In Victoria both political parties block its development, preferring blackout roulette, hoping Sydney will land on black first (An easy fix for our east coast gas mess, February 7).
• Another alternative is to encourage households and industry to develop their own power generation capacity and their own batteries, albeit at high cost. That’s what I would do if I lived in Adelaide.
• We need to recognise that Australian domestic gas is now being priced just below the world price once old contracts run out. And that will not change unless there is massive rise in supply. On the basis of present demand and the current world price there is probably enough gas for a decade but there is not enough if we erect more gas powered stations let alone lifting production so we can reduce the price.
• I don’t think the economic technology is there for clean coal and massive batteries but I might be wrong. It will come.
• The only way to get the price of power and gas down is to encourage extra supply. That will require major gas users coming together and offering big contracts. But that’s not much use while state governments are restricting the supply.
• Banks are prepared to invest in renewable generation but not carbon based generation so we are stuck.
• We can always go nuclear.
  The latest statement by all the energy parties is a start. But given the present state of political leadership we may need a Trump. I hope I am wrong.