Labor think tank’s gas power play short-circuits
A report from the McKell Institute on power prices made a big splash earlier this week. The Cost of Inaction study, Monday:
Wholesale gas prices play a central role in shaping household power prices, and current wholesale gas prices are significantly inflated, impacting businesses and household consumers. This report estimates the cost of policy inaction in gas to be significant.
And the unions went gangbusters on it. AWU national secretary Daniel Walton’s statement on Monday:
Malcolm Turnbull’s dodgy deal with multinational gas exporters means workers are being forced to watch their power bills shoot up as their job security plummets down
This would be the Labor-linked McKell Institute, by the way. Andrew Clennell reports in The Australian, January 10:
Sam Crosby currently runs the institute, but there is speculation Mr Crosby might run for the marginal seat of Reid against federal minister Craig Laundy at the next election.
The wholesale gas price is higher than it should be but the Labor think tank is running on old figures from September. McKell Institute report, Monday:
... many industrial users (are) being offered prices of $16-$22/GJ (gigajoule).
Prices have fallen somewhat for big industrial users since then. The Australian Competition & Consumer Commission’s interim gas review, December 13 last year:
Since July 2017, commodity gas prices offered to large C & I (commercial and industrial) users have eased and havegenerally been made at $8-12/GJ.
The McKell Institute also says we’d all ideally pay at the Queensland netback price. The Cost of Inaction study, continued:
The ACCC estimated median prices in Asian markets were around $5.87/GJ, and that ideally, spot netback prices in the Queensland market should be between $6.29 and $7.77/GJ.
If only Victoria and NSW would develop their gas resources, huh? ACCC report, December 13 last year:
There will be insufficient production in the southern states in 2018 to meet forecast domestic demand. This means that gas users in the southern states are relying on gas produced in Queensland to be transported into the southern states to meet their needs. The gas shortfall in the southern states can add at least $2/GJ and possibly up to $4/GJ to the prices paid by gas users in those states.
So who were the leading lights behind McKell’s power price study? The Cost of Inaction, continued:
Edward Cavanough is the manager of policy at the McKell Institute; Esther Rajadurai is a policy officer at the McKell Institute.
Rajadurai is straight out of university. The McKell policy officer’s LinkedIn page:
Macquarie University — Graduate Research Assistant — August 2016 to March 2017 (eight months).
While Cavanough’s longest job was as a rocker ... The McKell manager of policy’s LinkedIn:
Musician — January 2013 to August 2014 (one year and eight months) ... Performed across Australia ...
And who took it hook, line and sinker? TheSydney Morning Herald’s page three lead, Monday:
Policy analysts at the McKell Institute have for the first time modelled the impact of wholesale gas prices on household power bills ...