We had several opportunities to prevent this energy crisis. So why didn't we? |
Well, well, well, if it isn't the consequences of our own actions. After the Australian government shamelessly abandoned morality and international law to back Israel and the United States' illegal war on Iran, Australia is now experiencing the inevitable consequences, and successive federal governments have failed to plan for those too.
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Cowardly abandoning the international rules-based order when our so-called allies wage illegal wars makes all Australians less safe and less secure. But higher petrol prices and higher gas prices will mean a lower standard of living for most Australians, and that is where the federal government is really in trouble.
"This is the biggest threat to energy security in history," International Energy Agency (IEA) chief Fatih Birol told ABC's 7.30 this week. It's no exaggeration. In response to being attacked by Israel and the United States, Iran closed the Strait of Hormuz, resulting in an estimated 20 per cent of the world's gas and oil exports grinding to a halt, sending petrol prices skyrocketing here and around the world.
Iran also retaliated against US-aligned Gulf states like Qatar, bombing its LNG facilities and wiping out almost 20 per cent of global LNG supply. These twin energy crises have major implications for Australia; let's start with petrol and Australia's liquid fuel security.
If the Strait of Hormuz doesn't reopen soon, Australia will be at the pointy end of fuel shortages. Experts have long warned that Australia is far too dependent on imported oil. The IEA requires member countries to hold 90 days of the previous year's net daily oil imports to ensure fuel security, yet despite Australia's reliance on imported oil, we have among the smallest stockpiles of all IEA members.
When Russia invaded Ukraine, the IEA provided a helpful 10-point plan to cut oil use, which it estimated could cut oil demand by 2.75 million barrels a day in advanced economies within four months. Years later, Australia has yet to implement any of the recommendations, which include reducing highway speed limits by 10kmh, incentivising walking and cycling, making public transport cheaper and using high-speed and night trains for freight.
To make matters worse, a tax loophole has seen an explosion of sales of massive petrol-guzzling utes. According to Australia Institute research, large utes, such as Ram and Chevrolet pick-up trucks avoid the luxury car tax that other imported vehicles pay, regardless of whether the vehicles are used for work or just commuting. The $250 million cost of this subsidy is more than ten times the federal government's Active Transport Fund for the construction and upgrade of cycle paths every year. Over the last two decades, the number of big utes with big petrol tanks on our roads has grown much faster than the number of passenger vehicles, thanks to this tax loophole.
Meanwhile, the lack of electric vehicles in Australia can be laid at the feet of the failing Liberal and National parties, who did their best to undermine EV uptake during their decade or so in government. Scott Morrison's infamous scare campaign that Labor's electric vehicle policy would "end the weekend" now looks absurd. Those with electric vehicles will be free to enjoy their weekends, while millions of Australians can thank Scott Morrison for chaining them to the petrol pump.
Australia is in a much stronger position when it comes to gas, but we don't act like it.
Like Qatar, Australia is one of the largest exporters of liquefied natural gas (LNG) in the world, around 80 per cent of Australia's gas is used for export. With almost 20 per cent of Qatar's LNG exports wiped out as a consequence of Trump and Netanyahu's war on Iran, Australia's LNG will be in high demand and gas prices will go through the roof again, like they did in the wake of Russia's invasion of Ukraine.
Normally, this would be a good news story for Australians, generating massive revenue for the Australian government. Except the Australian government collects more money from the beer excise than from the petroleum resource rent tax. In fact, over half (56 per cent) of gas exported from Australia attracts zero royalty payments at all, effectively giving a public resource to multinational gas corporations for free. Australia Institute research estimated companies exporting liquified natural gas from Australia made windfall profits close to $100 billion between 2022 and 2024, when energy prices spiked because of Russia's invasion of Ukraine.
"At best, $20 billion in company tax may have been paid on the near-$100 billion windfall the LNG industry enjoyed since Russia's invasion of Ukraine", the report concluded. It wasn't earned with greater productivity or innovation, it was war profits.
This is why the ACTU's idea of a 25 per cent tax on gas exports is gaining support from across the political spectrum in Parliament - from the Greens to One Nation. Australians are sick of getting ripped off by the gas export industry. Gas export companies are raking in windfall profits, while Australians struggle to pay their gas bills. It's indefensible.
Will a gas export tax harm Australia's diplomatic relationships, as the gas lobby (and countries like Japan) claim? No. Australia is a stable and reliable trade partner. Multinational companies can't just move their operations overseas because the gas is here. All that will happen is that multinational gas corporations will pay more tax to Australia.
Neither would a gas export tax impair the ability of gas export companies to meet their existing contractual obligations. In fact, last year Australia sold more spare, uncontracted gas on the spot market than all of the gas used in Australia by all households, all industries and all electricity generators.
The Prime Minister's department has reportedly asked Treasury to model a gas export tax for the budget and it's about time. A 25 per cent tax on gas exports could raise $17 billion revenue every year, while incentivising producers to prioritise the supply of gas to households and domestic businesses.
To waste one global energy crisis without taxing the gas export industry properly may be regarded as misfortune; to waste a second is negligence.
Ebony Bennett is deputy director for The Australia Institute and a former Greens media advisor and a regular columnist for The Canberra Times.
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