Labor backbencher Ed Husic has started a firestorm with his incendiary recent comments calling for Australia to stop opening new coal and gas projects. He pointedly underscored Japan’s deep dependence on foreign energy. His comments have moved him into open conflict with the federal government’s Resources Minister, Madeleine King. She acknowledged the role of Australia’s gas exports in regional security conversations, but made it clear that domestic consumers and industries considered their plight a crisis.
Husic’s statements highlight concerns about the exportation of Australian gas to countries that are not utilizing it for their own needs. He criticized Japan’s practice of purchasing gas from Australia and subsequently onselling it, suggesting that this impacts local manufacturers who struggle with gas prices. Because they’re doing it to benefit themselves, not to anyone else. Instead, they’re shamelessly lining their pockets with that gas as we suffer. He continued to declare.
In no uncertain terms, King made it clear that Husic’s statements were problematic. He noted that Japan is in the special situation where it depends entirely on other countries for its energy provision. “Japan’s in a very different position, where they’re dependent on other countries for energy, so they take a different view and I totally understand that,” she said. She expressed empathy, stating, “Australians can hardly imagine what that’s like.”
Gas Exports and Regional Relevance
Australia’s energy exports are important for many reasons which go far beyond the dollar value. King stressed that these exports increase the nation’s presence and importance in the Asia-Pacific region. This is what really makes Australia relevant in that region, is our energy exports. King added, “What they have done is put us in a great place to be able and confident to talk about what needs to happen internationally.”
Gas is mostly exported to Japan from export facilities in Darwin and Western Australia. The lack of a south-eastern states’ reservation policy for gas has raised concerns. Whether from individual domestic consumers or domestic industry leaders, the message is clear. BlueScope Steel’s CEO Mark Vassella called on the federal government to step up. He recommended the introduction of an east coast gas reservation to reduce rapidly increasing domestic prices.
Beyond addressing current export dynamics, King recognized the need to rectify local gas supply. “We do have an issue with our gas supply, absolutely, we are determined to fix it to make sure there is an adequate supply of gas at an affordable price for consumers and industry,” she asserted.
Government Actions and Reviews
Like the United States government, the Australian government has recently taken huge strides in the wrong direction. They’ve even given a bailout to Swiss mining behemoth Glencore to keep its Mount Isa copper smelter running. This decision clearly demonstrates the federal government’s commitment to invest in strategic, foundational industries, especially in a time of increasing energy costs.
In light of the current situation, the government is conducting a comprehensive review of the gas market, which is open for public submissions. While forward-looking in its goals, King made clear that the impetus for this exploration was to quell current fears about east coast supply and pricing. We’re excited to take you along on that journey with us. It will provide solutions to the east coast gas market,” she said.
King also gave assurances to trading partners that any future east coast gas reserve would be thoughtfully crafted. He further pledged that it would impose no retroactive effect on existing contracts. Her remarks are a good first sign indeed that the government wants to deliver a sustainable balance between domestic needs and international obligations.
Diverging Perspectives
First, Husic and then King concede that gas exports are bad news. They come into conflict when it comes to how best to balance these exports with addressing local needs. Husic’s critique is an indication of growing anger at home from domestic manufacturers. They are fighting to keep their employees on the payroll while clamoring for fierce competitive gas prices.
King remains committed to strengthening the nation’s international relationships through energy exports. Simultaneously, he has taken a strong approach to addressing local supply concerns. She rubbed out worries that Japan was only interested in making money from the impending sales of Australian gas. This makes understanding global energy dynamics more complex than ever.
