Analysis and Commentary

Albanese talks up putting a cap on coal and gas prices

Analysis and Commentary

By Peter Roberts

The Prime Minister Anthony Albanese has moved to demonstrate he is serious about acting to cut ballooning electricity prices before Christmas – as he has promised – with feelers put out to the states for price caps to be applied to coal and gas.

It is about time because all the months talking to the fossil fuel producers, supposed ‘agreements’ to increase supply and public urgings to do the right thing, Labor has achieved little to nothing in controlling energy prices.

Now, acknowledging that he needed the states to co-operate, Albanese’s staff on the weekend reportedly floated the idea of imposing a price cap of between $11 and $13 a gigajoule for domestic, commercial and industrial users of gas.

New South Wales and Queensland would have to cooperate on such a move, with early indications from Queensland indicating a price cap is much more complicated than it might appear, and far from popular in the coal producing states.

Queensland Premier Annastacia Palaszczuk said she would not jeopardise her state’s ability to reimburse the public through profits generated from state-owned power generators.

This means Queensland would want compensation for any revenue lost in capping prices which have soared in recent times.

New South Wales Premier Dominic Perrott was much more sanguine about price caps, saying Canberra had the power to impose them, so it was only a matter of compensation.

The Premiers are meeting with the federal government in Canberra this week, but the urgency and need for action is real.

In the recent budget, Treasurer Jim Chalmers said energy prices could increase by an average of 20 percent by December and 30 percent in 2023-2024 due to by fallout from Russia’s invasion of Ukraine.

Manufacturing was under pressure from lack of long term supplies and soaring prices even before the war, and no doubt manufacturers would be happy to see a little market intervention if prices could be reigned in.

Of course the fossil fuel producers are pushing back at any move to cap prices, but they are in a rather weak position.

Having reaped windfall profits for months, if not years now, the companies can hardly cry poor. The only ones entitled to do that are local consumers who have been forced to pay world prices for abundant Australian resources.

Speaking of entitled, the coal and gas exporters are not entitled to anything.

Australian resources are owned by the Commonwealth, and only exported with permission of the Commonwealth.

What can be given can be taken away, and given the level of profiteering and damage being done to the rest of the economy as well as households, it should be.

As for warnings from the likes of Woodside that they might have to reassess their investment plans if gas price caps were introduced, let them punish Australia for acting in Australia’s interests, and we can modify their licence to export accordingly.

Picture: NSW Labor/Anthony Albanese

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