Surprise! Australia’s Green Transition Energy Price Caps are Causing Supply Side Chaos

Essay by Eric Worrall

“… The gas industry is still behaving like a bunch of bullies and effectively looking like they’re withholding supply, …”

Gas price caps haven’t been silver bullet the Albanese government was hoping for 

Industry behaving like a ‘bunch of bullies’ and potentially withholding supply, users say, while producers argue intervention has ‘paralysed the market’

Peter Hannam Tue 17 Jan 2023 01.00 AEDT

Strains in the gas market have not been eased by the Albanese government’s price caps imposed late last year, with an industry group claiming supply shortages remain while the peak gas lobby is warning the sector has become “virtually paralysed”.

One month on from the government’s rare intervention to limit domestic gas prices to $12 a gigajoule and black coal to $125 a tonne, big commercial gas users are hoping new compliance guidelines to be released soon by the Australian Competition and Consumer Commission will force suppliers to provide an adequate supply.

“The gas industry is still behaving like a bunch of bullies and effectively looking like they’re withholding supply,” said Andrew Richards, CEO of the Energy Users Association of Australia (EUAA). “You would only withhold supply if you had market power.”

Samantha McCulloch, the chief executive of the Australian Petroleum Production & Exploration Association (Appea), said the government’s intervention had resulted in “a chilling of the market” at a time when the sector needed more investment to boost supply.

“The gas industry has sought clarification of a number of practical questions and issues regarding the implementation of the price cap and we are still waiting for guidance from the regulator,” McCulloch said. “The lack of clarity on how the price cap order is to be applied alongside the threat of permanent gas price regulation has virtually paralysed the market.”

Read more:

WUWT foresaw price caps would lead to an availability crisis back in June, when the the Aussie government started capping energy prices and expropriating energy companies.

You would have to be a socialist to believe there could be any other possible outcome.

The only question is, since energy price caps are failing to deliver the politically desired outcome, what is the government’s next move?

My guess is energy company nationalisation. Some major energy assets are already government owned, and the Victorian Dan Andrews government recently made moves in the direction of energy asset nationalisation. In my opinion, it is only a matter of time until the left wing radicals who run the Aussie Federal Government attempt to fully nationalise the Aussie energy industry.

Given the Aussie government’s track record of expropriation and trampling of property rights during the imposition of energy price caps, I’m guessing the current owners of Aussie energy assets will be less than satisfied with any compensation offered, if their plant and equipment is nationalised.

via Watts Up With That?

January 16, 2023 at 08:05PM

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