28
Sep
2017

Gas and Political Crises

Political Crisis

The further fall (down to a 46/54 TPP) in the Coalition’s Newspoll last Monday might have been expected to produce a swathe of comments as to either the possible replacement of Turnbull or possible major changes in Coalition policies. Surprisingly, few did so. Former Labor minister and now a journalist for The Australian, Graham Richardson, wrote a short article which included the following

“The Liberal Party is in some sort of pre traumatic syndrome. They are limping along to absolutely no avail and are heading for disaster. No one appears to have the will to take Turnbull on, so the waiting game continues. The lemmings have their bags packed for their trip over the cliff and are accepting of their fate. While the silence about the quality of leadership continues, the obvious lack of a star alternative means that few complain. Just how long this discipline may last is anybody’s guess. Eventually panic should set in unless there is a massive kangaroo-in-the-spotlight syndrome. I know that the desire to hold on to your own seat is a powerful incentive to raise a voice in anger or dissent. So far no one has been prepared to come out that harshly. So for the time being an undeserving, unpopular leader is able to hold on to power by a thread. Will the sleeping dogs be down for much longer? I doubt it, so eventually we will know who did the dirty deed” (see Richardson on Poll).

The best that pro-Turnbull  journo Savva can come up with in today’s article is to acknowledge that an election now would result in the Coalition being “smashed” but that Turnbull has enough time to recover before a mid June election in 2019 (see Savva on Poll). Just how that might occur we are not told, although she advocates an early budget as a “launch pad”.

What if there is a further fall, which is quite possible as Turnbull continues to show  he is not a leader and certainly not one for a Liberal party? As shown by the sudden emergence of a new leader of the NZ Labor Party in that country’s election, and the unexpected emergence of a 12 per cent vote (94 seats) for Alternative for Germany in that country’s election,  a new younger Liberal MP here could spring a surprise result for the Coalition. There is now an opportunity for one or more to challenge Turnbull and have a better chance than him of winning an election. If that doesn’t happen it is possible that a Turnbull-led Coalition will perform even worse than implied by the 46/54 in Newspoll. That measure does not include Cory Bernadi’s Australian Conservatives as a separately identified item in the poll and its supporters would instead be recorded in “Others”, who recorded about the same as the Greens (9) and One Nation (8). In an election campaign Bernadi might well “steal” additional votes from the Coalition.

Gas Crisis Overcome?

Yesterday’s meeting by Turnbull (with Joyce and Frydenberg) with three big gas exporters (Santos, Origin and Shell) resulted in a “pledge” by the companies to increase the amount of gas put on the domestic market so as to avoid the shortfall currently forecast for 2018 by AEMO (the Australian Energy Market Operator). A further meeting is to be held next Tuesday to finalise the details of the agreement, which will apparently be in written form. At the Press Conference held after the meeting, Turnbull explained (sic) the arrangement as follows

“In terms of any additional gas requirements, and as you know, AEMO identified additional gas requirements up to 107 petajoules of gas in 2018 on top of the expected shortfall amount – so identified 54 petajoules as an expected shortfall and then up to 107 depending on what happens with the weather and a big thermal generator breaking down and so forth – they have given us a commitment that they will continue discussing that with AEMO but very importantly, so as to ensure that if the gas is needed, it will be provided, both in 2018 and 2019, depending on what happens with the weather and a big thermal generator breaking down and so forth”.

One wonders how the exactly the weather, a possible breakdown in a “big thermal generator” and any mis-forecast will be written into this proposed agreement and whether the large additional supply (compared to the estimated shortfall) will lead to lower gas prices, which is Turnbull’s hope. At the meeting reference appears to have been made to 2019 possibly being included in the agreement.

Because of the detail involved, and the possible effects on future policies in regard to other sources of electric power, it is difficult to assess the likely implications of this arrangement. However it is noted that

  • Turnbull has taken no steps to involve the states in this “plan”. Yet it is the states which are preventing , in varying degrees, investments in the large amounts of gas  known to be available as well as the potential  gas from fracking as in the US.  I have previously suggested (and it is now proposed by Judith Sloan) that the offending states be subjected to reduced federal grants if they persist with existing “no gas” or “no more gas “policies. The problem can be said to be a national one and should involve the Commonwealth.
  • Turnbull has given no indication of any possible change in policies regarding power from coal-generated sources. Yet an important reason for the shortage of gas is that its use as a power source has increased because the power from coal-generated sources has diminished. States also have policies which have the effect of reducing supplies of power from coal-generated sources, although it is the Commonwealth which is leading the deterrers.  Andrew Bolt points out that in the last four years the policies towards usage of coal have caused seven coal-fired generators to be shut (See Bolt on Gas). Bolt also  draws attention to the restrictions by the states on fracking, but whether it is the states or the Commonwealth, as PM of the nation Turnbull should be taking the lead to reduce, preferably eliminate policies which are forcing reductions in emissions  of CO2 and requiring usage of renewable.

In short, even assuming the success of the reported agreement on additional supplies of gas in 2018, the potential for shortages of power from that source and from coal-generated power is likely to continue. What is required from Turnbull is an abandonment of any clean energy target and a move towards similar policies adopted in South Korea (just visited by Shorten) and Russia.

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