Comment by jbarham | Hacker News Reader

Comment by jbarham | Hacker News Reader

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The only reason that natural gas prices in Australia have gone up in the past 10 years is that gas producers in the eastern states were able to start exporting gas as LNG.

As of 2023, Australia is the world's second largest LNG exporter (source: https://www.statista.com/statistics/1262074/global-lng-expor...) after the US (take that Russia!) and ahead of Qatar. Great for the gas exporting cartel but not so great for ordinary Australians in eastern states who now pay the same for gas as people in Tokyo. (And Aussies wonder why manufacturers keep leaving...)

Banning domestic gas usage for new homes (which the fools running Victoria, the state I live in, have done) will do nothing for emissions but will mean that the gas cartel can make even more money exporting LNG to Asia. Bravo!

The exception is Western Australia which is also a massive LNG exporter but has stricter domestic reservation requirements than the eastern states.

All of the above has been extensively documented at https://www.macrobusiness.com.au/ (source: https://www.google.com.au/search?q=site%3Ahttps%3A%2F%2Fwww....).

What you seem to be saying is that Australians had gas that was artificially cheap because it wasn't being bought and sold at international market rates, and once that started happening and the market was no longer distorted by trade limitations, the fair market price was not longer attractive to Australian customers.

(Personally, I think all countries, to the extent that they can, ought to both reduce domestic fossil fuel use and at the same time impose strict limits on its export. We're all better off if it just stays in the ground.)

It wasn't "artifically" cheap nor was the market "distorted". It was merely the physical reality prior to the innovation of LNG.

It would only be fair to say it was artifically cheap, say, if the Australian government was imposing tariffs or subsidising production. I don't think it was doing that, and as it was, the producers were sufficiently incentivised by the market to produce and sell gas domestically.

There was an inefficient allocation of resources that was disrupted by technology.

How was it "inefficient"?

A tech shock doesn't mean the old status quo was inefficient.

E.g., conventional mail wasn't inefficient prior to email

Mail (physical means of communicating in writing and print) and email (connecting two people with digital signal) are similar but not a great comparison when comparing consumption of natural gas. Technology literally created additional markets for the same material, by modifying it so it could be transported more efficiently over long distances. I think you could say the new methods of natural gas production and storage are more efficient just as easily as saying the old methods were simply inefficient (it would have been possible to pipeline gas from AU to markets across the ocean, but it didn’t make economic sense because it would have been terribly costly and thus an inefficient use of resources)

> Mail (physical means of communicating in writing and print) and email (connecting two people with digital signal) are similar but not a great comparison when comparing consumption of natural gas.

What?

You are missing the point. We're talking about "markets" not the specific "tech/substitutes." It could be any technology disruption. Such disruption doesn't mean the prior status quo IN THE MARKET was inefficient. The tech shock just resets equilibrium.

Further, your explanation is circular, and I propose it has to do with muddling terminology and concepts.

Here's one inconsistency. Either the markets didn't exist (You said they need to be "created."), or they did exist, but a pipeline connecting them was too expensive.

> Technology literally created additional markets

> it would have been possible to pipeline gas from AU to markets across the ocean, but it didn’t make economic sense

Just goes to show that free markets aren't always the best for the citizens of a country.

It's clearly a bad deal for Australians, who now pay higher gas prices, but not for international importers, who probably pay less because of increased competition.

Higher gas prices is good for fighting climate change - it makes renewable energy more competitive. Now, is the opposite the case for, say the Japanese, who import gas from Australia? Are they less incentivized to switch away? Probably somewhat, but less so, because of transaction and transportation costs.

> will do nothing for emissions

How can that be?

Direct consumption emissions are eliminated.

Those with solar (a growing percentage) reduce their indirect emissions from grid non-renewable generators.

And there is a growing percentage of green generation on the grid.

>> will do nothing for emissions > How can that be?

Because a reduction of domestic gas usage will just be diverted to less efficient LNG exports.

Given that by far the largest source of Victoria's electricity generation capacity is from dirty brown coal [1] if anything banning domestic gas usage might even make emissions worse since it will force people to use only electricity for cooking and heating.

> Direct consumption emissions are eliminated.

Ah, so burning Aussie natural gas in Asia (after it's been liquified and then turned back into gas) is somehow better for the environment than just burning it in Australia?

1: https://en.wikipedia.org/wiki/Energy_in_Victoria#Electricity...

This. Have friends in this industry.

The biggest pushers of no domestic gas are the producers and finance guys. They make a lot more money on exports.

Is the correct strategy to wait to regulate gas usage until every country on earth does the same? That doesn't seem like a winning strategy. Someone always has to be last.

It is stupid, with less Gas available on the LNG Market other LNG Producers will increase production or they will use other Energy sources such as coal.

It's banning the installation of NEW LNG appliances in homes in Victoria.

It doesn't impact commercial use of LNG, or the extraction or export of LNG.

If you want to help the environment, you regulate both gas usage and exports. The goal is to keep gas in the ground, where it belongs, not to move it to other countries.

Except gas exports are largely being used to retire brown coal burning which is even worse for the environment than LNG. This isn't an all-or-nothing deal even with exports. The richer countries should take on the costs of better efficiency first and we can trickle those technologies down to other nations as they become cheaper than LNG and coal.

Banning domestic gas usage while a significant proportion of you electricity supply is produced by burning coal seems beyond absurd..

Except that it won't be that way forever. 30% of that generation goes away in 4 years. The rate of solar and wind generators coming onto the grid is massive, putting pressure on the brown coal generators.

We are also not talking about ripping out the existing install base of appliances.

It will take at least a decade or two for that switch to reach a critical mass. That's the point when it becomes uneconomic to continue operating the domestic piped LNG network in Victoria.

> Ah, so burning Aussie natural gas in Asia is somehow better for the environment than just burning it in Australia?

If it displaces burning coal in Asia, maybe it is? https://www.asahi.com/ajw/articles/14670874

The chart you link to shows that Brown Coal, as both a total, and as an overall percentage of the grid, is decreasing, with renewables increasing.

Indeed, if you look at the three Brown Coal generators in Victoria[1], Yallorn is due to shut down in 2028 taking ~30% (1480MW) of that away, followed by Loy Yang A in 2035 which will take another ~40% (2200MW) of that capacity.

So, banning new LNG appliances now, and starting that migration will have a net positive impact.

This is true even if the LNG continues to be burned overseas if it's replacing coal fired generation capacity.

[1] https://en.wikipedia.org/wiki/List_of_coal-fired_power_stati...

It costs money to transport LNG abroad. Ships, terminal infrastructure maintenance, people, it's all overhead. Ultimately if people stop using natural gas domestically there will be a reduction in production because that overhead eats into the profits of the producers.

All that export infra is paid for/backed by long term shipping contracts.

Finance for domestic infra is harder to get because no one wants to be locked into 20 year supply arrangements.

The Japanese were, and that's what paid for Gladstone, and that's why for a period, Australian ng was cheaper in Japan than on-shore.

In the last 3 years coal went from 65% to 58%, expect this trend to continue and even accelerate. See the link below. https://www.energy.vic.gov.au/renewable-energy/victorian-ren...

Seems like the main issue here is Victoria burning coal and they should stop doing that.

That's already the plan, though it would help push things if the government stopped subsidising the industry.

Interesting. Of course transporting gas across the Australian continent and selling it cheaply is a lot less lucrative than selling it abroad in lng form. So, I can see why they would focus on exports rather than a relatively small domestic market that is on the other side of the continent.

Anyway, Australia has no excuse for not using solar energy. Which is exactly what they are doing over there despite conservative governments trying to slow that down for the last decade or so. I doesn't need to depend on fossil fuels.

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