The people will punish our energy vandals

The two major parties face a drubbing once the public wake up to the full impact of our woeful energy policy settings.

BlueScope chief Paul O'Malley has issued an unprecedented warning. (Britta Campion/The Australian)

Once the general public wake up to the fact that, in the interests of political correctness and globalisation, both our major parties are intent on boosting local power costs and destroying vast numbers of jobs, we should be prepared for a severe community reaction.

In the US, a different set of pro-globalisation/politically correct American policies created vast areas of misery and the people affected voted for Donald Trump as President on the back of his protectionist policies.

In Australia, if we continue down the current path, we will see a right wing protectionist party emerge (the most likely candidate is One Nation, though it could be another group) but we will also see a Bernie Sanders-style movement from the left looking to reverse political correctness and globalisation in a different way.

And those who have invested in the Queensland LNG projects should realise they face a grave, long-term risk.

I realise my readers will say I’m going over the top — and I hope I am — but let’s look at what is happening step by step.

First, the chief of the largest industrial complex in the nation, BlueScope Steel (formerly BHP Steel) has issued an unprecedented warning. These are the words he used when speaking to Matt Chambers (BlueScope chief Paul O’Malley warns of energy ‘catastrophe’, February 21)

“Too many LNG export trains had been built at Gladstone at too a high a cost and that, while reservation was a ‘dirty word’ in Australia, there needed to be a policy that recognised the nation needed affordable gas.

“Many people argue that (Queensland LNG export) is a great thing but I query whether increasing the energy cost to all businesses in Australia is actually in the national interest.

“Price increases are running out of control because there is not a policy to ensure competitiveness of supply and competitiveness among suppliers.”

Let me put it even more bluntly than O’Malley. The Queensland LNG producers set up infrastructure and signed contracts to export gas they did not have. So they are now acting as a vacuum, sucking in gas from all parts of the country, including Bass Strait and the Cooper Basin.

With old, low-price domestic gas supply contracts quickly running out, anyone wanting gas in Australia must pay the export price (which is linked to the world oil price) less the cost of transporting the gas to Queensland. And the gas producers can see an even bigger bonanza because state governments have decided to stop the development of new gas so that there will be an even bigger supply squeeze that could send the gas price even higher.

In very simple terms, that might not mean that countless major industrial projects close straight away but that they will stop investing and that represents a death warrant.

The current politicians do not get held to account because the “death warrants” take time to be served. Port Kembla Steel, Australian Paper, the Altona complex, Whyalla Steel are all in the front line but there are many others.

In Victoria, two energy vandals, Premier Daniel Andrews and Opposition Leader Matthew Guy signed their state’s “death warrant” when they stopped a massive gas development that didn’t involve fracking in Gippsland (An easy fix for our east coast gas mess, February 7)

This is an unbelievably stupid decision, particularly given that agriculture is not endangered and farmers could actually benefit from the move.

But NSW is no better because the Coalition gets its ideas from breakfast radio (Alan Jones) and stopped the Narrabri gas project. Just wait until ordinary people understand the ramifications of what these politically correct political parties have done to our two biggest population centres.

The Northern Territory is also playing hardball.

The Federal Government has set up a high powered committee of minsters but it has no engineering talent and the biggest problem is the State Coalition parties.

But anyway, Paul O’Malley tells them what they should attempt to do:

O’Malley: “There needs to be a set number of coal and base load or peaking gas units, then we can add in as much renewables as we need, but that system needs to be as stable as possible so when the wind or sun stops the grid doesn’t fall.”

Some of my green mates actually understand the fact that, unless we go back to high tariffs, protectionism and lower living standards, it is unsustainable that Australian energy prices are 10 times that of the US.

But they tell me that we have the opportunity in Australia to create base load power via “pumped hydro”. This basically involves water being pumped into dams and released when base load power is required. A lot more use can be made of the Snowy and other facilities using this technique. I am not in position to debate the merits of this concept but there must be surely someone who can look at it in Canberra.

Even more importantly, why is our energy system so inefficient that it costs are ten times that of the US?

I suspect that the power companies have not invested in updating plant and transmission, partly because of poor regulation. In just the same way their customers are now going to cut back on vital investment.

How do we get the state legislatures in NSW and Victoria to understand the problem without voting in One Nation or an extreme left party to make the required energy policy changes?

Remember, we got through the aftermath of the mining boom in part because of a massive commitment of Chinese money and local bank money (funded by overseas borrowing) for housing. That is now winding back.

Unlike the BHP chiefs, to my knowledge, Paul O’Malley has not been called up by President Trump to entice him to expand BlueScope’s US steel interests with lower taxes and a tariff/tax protection system.

I explained the Trump republican plan at the weekend (How to navigate through Trump’s brave new world, February 17).

At some future point, BlueScope may face the decision of choosing between massive investments in the US and letting Port Kembla die. If they chose the US, then Australians will correctly blame our current batch of politicians.