The bell has gone and the manufacturing industry has come out swinging, pinning the gas industry to the side of the octagon* with its domestic gas press.
It is slipping in some hard and, according to some commentators, low blows pointing out the manufacturing revitalisation in the US on the back of its shale gale.
And here comes the sharp rising knee of justification – they are doing it all thanks to access to cheap energy due to a cheap gas price.
The gas industry has taken the blow amidships. It is still standing but that hurt.
It attempts a counterstrike with a sharp left “yeah but the Yanks don’t have any LNG export facilities to speak of” but it seems to have been a bit mistimed. Maybe that knee of justification hit a bit more centrally than first thought.
What’s this, the choke hold or shattered dreams of a great manufacturing renaissance? The manufacturing industry is playing for keeps.
Is the gas industry going to tap out? Yes, yes, yes. No wait! Here comes the counter. With one deft move the industry has deftly seized an Energy Quest report and twisted out of danger.
And here comes the boom.
According to industry body the Australian Petroleum Production and Exploration Association it is time to ask whether it is a free market or a free lunch the manufacturing sector is calling for.
Ouch! That’s got to hurt. Right in the moral indignation breadbasket.
Time to go for the throat.
It points out that the Enegy Quest report Domestic Gas Market Interventions: International Experience shows domestic gas reservation is uncalled for.
The report looks at major government intervention in the formation of domestic wholesale gas prices in 20 countries that in 2011 produced 74% of the world’s natural gas.
Of the OECD countries’ reviews – Canada, the Netherlands, Norway, the UK and the US – none have government intervention in their gas markets except the US and Canada.
In those latter two cases gas producers have to get government approval to export.
That’s taken the manufacturing industry to the mat. Time for a bit of ground and pound.
The shale gas revolution in the US, facilitated by the free gas market, the report says, is impacting the global energy market and energy prices globally.
“In the US it has reduced both gas and crude oil prices,” the report says.
“The US is now exporting cheap coal to Europe, reducing European prices and driving gas demand down to 2003 levels.
“This in turn is pushing LNG cargoes from the Atlantic into the Pacific.”
The report also looks at 15 non-OECD countries that all intervene in price setting for natural gas and finds that this regulation does not necessarily produce low gas prices in these countries.
This is getting brutal. Surely the ref has to step in and stop this.
APPEA chief executive David Byers said the international experience clearly offered lessons for Australian policy makers – that gas reservation was not the way forward.
“An examination of the real world experience shows energy policies generally reflect whether a country has a market economy or not, whether its industry is state-owned and where it ranks globally in regard to economic development,” he said.
“Introducing gas reservation policy would do nothing to stimulate the exploration and development needed to deliver new gas supplies and put downward pressure on prices.”
That’s almost it folks. Surely manufacturing has nothing left.
Oh, this could be the knockout blow here.
“In an advanced economy underpinned by competitive markets, such as Australia, one industry should not be required to subsidise the activities of another,” he said.
Nice try David but that is the sort of argument some states have been running in the federal sphere for several years. If it doesn’t work for them it probably won’t work for you.
But the pin is almost coming. It’s so close the gas industry can feel it.
Wait. Wait.
DING.
Okay folks, that’s the end of round one.
*Note, this battle could not take place in Western Australia. Not only does it already have a domestic gas policy, it has also banned the use of the octagon for mixed martial arts bouts.
