the politics of gas lobbying…

Gas prices are still dropping, in the US to a quarter of what they were. This must cause a huge impediment to developing the high cost Browse field by Woodside Petroleum. Thankfully this would mean no LNG plant near Broome, although the State and Federal Governments may try offering even bigger incentives. The protesting Broome Community however, will continue to delay and obstruct until they leave.

This excellent column reports on Dow Chemicals lobbying to add value-adding manufacturing and industry to LNG processing in favour of exports.

Dow Chemicals: snouts in the trough

What is it about Dow Chemicals?
Its CEO, Australian born Andrew Liveris, has written a book that reprises the 1970s winner picking philosophy. His view is that if we chose the right industries and give them tax breaks and special government purchasing favours then all will be hunky dory. Among the gee wiz sectors he has specified are solar panels, and he considers the demise of Solyndra after its $500 million government hand-out as simply proving his point – the firm failed because industry has been so successful in reducing costs of panels. He is not discouraged by the fact that even with the cost reductions it costs in subsidies and regulatory enforcements at least $5 to earn $1.

Nobody will be surprised to learn that President Obama made such a sage chairman of his Advanced Manufacturing Partnership that aims at discovering and promoting hi tech job opportunities.

Now we have the local arm of Dow lobbying Canberra. According to today’s AFR,
Australia should give domestic users of natural gas tax breaks rather than exporting the gas as liquefied natural gas and shipping jobs offshore, according to a senior executive for US petrochemical firm Dow Chemicals. Dow’s vice-president energy and climate change, George Blitz, was in Canberra yesterday to deliver a submission to the federal government’s draft white paper on energy policy, and questioned a key conclusion that there was no need to restrict gas exports in favour of domestic customers.

 

He said Australia was losing the opportunity to attract high value-added manufacturing and shift to low-carbon gas power generation. “Relying heavily on export provides an immediate one-time benefit to an economy but neglects the long-term additional value that these resources could provide if prioritised for domestic manufacturing purposes,” Mr Blitz said. He said the multiplier effect for the economy from using gas locally to develop industries such as fertilisers, glass making and petrochemicals and keeping power prices low for all customers was eight times bigger than simply exporting.

Maybe we should reserve for domestic use and processing a proportion of local supplies of raw wool, iron ore and mineral sands. The multiplier effects must be far in excess of the puny eightfold increase Dow claims for its gas reservation policy! Come to think of it we could ban all trade and solve our unemployment problems immediately.

Domestic reservation means that a share of the gas must be sold at lower prices ex-mine than would be available if exported – and that is the goal of Dow and other users. But the market for gas is shifting tectonically with the technology developments in coal seam and shale gas extraction and US prices have fallen to a quarter of their former levels (only a small part of which is due to the recession).

And if a project is obliged to reserve, say 20 per cent of its output for domestic use and this sells at 30 per cent below the ex-mine export parity price the revenue is off by six per cent. Though politicians might think this is relatively small, businessmen should understand that a six per cent revenue haircut all comes off the bottom line and might therefore be a 50 per cent profit rate haircut. That would kill most prospective projects.

When the Queensland Government flirted with a gas reservation policy, the industry swiftly made these realities known to them and the Bligh Government backed off. But the protectionist forces are powerful and even the mostly reliable Martin Ferguson in his draft White Paper on energy did not totally reject the notion of a domestic reservation policy.

This is a very competitive industry. There is stacks of the new gas available worldwide (and Australia’s CSG alone is greater than our conventional gas reserves and we also have shale gas). Australian firms and users are likely to see lower gas prices than those found overseas because of savings in transport and liquefaction. To force even lower prices means wasted resources and an industry base that will not be sustainable.

(my bold)

About Tom Harley

Amateur ecologist and horticulturalist and CEO of Kimberley Environmental Horticulture Inc. (Tom Harley) Kimberley Environmental Horticulture Incorporated Kimberley Environmental Horticulture (KEH) is a small group of committed individuals who promote the use of indigenous plants for the landscaping of parks and gardens. Rehabilitation of Kimberley coast, bushland and pastoral regions are also high on our agenda. This includes planting seedlings, weed control, damage from erosion or any other environmental matter that comes to our attention. We come from all walks of life, from Professionals and Trades oriented occupations, Pensioners and Students, Public Servants and the Unemployed. We have a community plant nursery where we trial many old and new species, with a view to incorporating these into our landscaping trials. Our labour force are mainly volunteers, but with considerable help from the 'work for the dole' program, Indigenous Community Development Employment Program (CDEP) groups and the Ministry of Justice, with their community work orders; in this way we manage to train many people in the horticultural skills needed for indigenous plant growing. We constantly undertake field trips that cover seed and plant collection in the Kimberley. Networking around the Kimberley region and the east Pilbara is a necessary part of promoting our activities. We consult on a range of Environmental and Landscaping matters that deal with our region. Our activities involve improving Broome's residential streetscapes by including 'waterwise' priciples in planting out nature strips. Sustainable environmental horticulture is practised by members of our group. We use existing vegetation as the backbone of any plantings, using these species to advantage when planning to develop tree forms or orchards. The Broome region is sensitive to development. Subsequently many weed species have become dominant in and around developed areas. The use and movement of heavy machinery is the biggest single cause of environmental degradation. We dont live in a 'Tropical Paradise' but on the edge of the Great Sandy Desert. The plants that survive best here, grow in well-drained pindan sand, and are found from the Dampier Peninsular southward to where average rainfall is below 600mm. When we use rainforest species, detail is important when planting, water catchment, sunlight and understorey species are all considered. The use of recycled 'grey' water is an advantage here as well as treated waste-water, although many local species do not fare well with nutrients from this source. We use waterwise planting methods which include harvesting asmuch rainwater as possible, with swales designed to hold up to 200 litres, to help recharge the local groundwater aquifer. There has been a serious decline in this aquifer over the last few years. With the fast expansion of the Broome peninsular, more and more land is being covered by concrete, iron and bitumen so that much less water is available to replenish the aquifer, allowing the salt content to become significantly higher. The small Broome Peninsular is on the south-western corner of the Dampier Peninsular (bound by Broome, Derby and Cape Leveque at the northern tip). Compaction by vehicles also inhibits water retention due to the content of our local pindan sand, hard as concrete in the dry, going to soft and sloppy mud after rain. None of us are botanists, inevitably we have got some names wrong, names changed, or have not gone to sub-species level. If you note a photo or description may be wrong, please e-mail to kimenvhort@yahoo.com.au
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