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Chapter 1: What is the main topic discussed in this episode?
ABC Listen. Podcasts, radio, news, music and more. Welcome to Fuelcast. I'm Daniel Ziffer and this is your source to stay on top of the numbers behind our ongoing energy crisis. It's Wednesday, May 27th. We're recording mid-morning. Let's have a look at the figures. The price of Brent crude has risen to US $100 a barrel. Finally, something we can remember, at least for today.
The national average price of unleaded has dropped slightly to Australian $1.86 per litre. And the national average price of diesel has dropped to two Australian dollars and 34 cents a litre. So $2.34 for diesel. Today, I'm joined by Tom Crowley to dig into the big energy headlines. Good morning, Tom.
Good morning, Dan. It's good to be back with you. Refuelling, I suppose I can say. It's a pleasure.
Tom, one of the big stories out of Canberra this week is the draft discussion paper for the government's domestic gas reservation policy. What do we need to know?
Well, Dan, this is an important step in what it must be said is a rather torturous process. So the idea here is really very basic and has had quite a very political lineage. The idea that some of Australia's abundant gas ought to be kept here for our use when so much of it is exported. It was an idea that the crossbench liked.
It's an idea that Peter Dutton took up when he was the opposition leader and the government is now trying to make it work. It exists in some ways. in some parts of the country, particularly Western Australia. The government, just before the budget, announced the magic number of exactly how much gas the producers would be required to keep here, and that is 20%.
Now, just to break down, this is the wild idea that whilst we're amongst the world's one or two or three top exporters of liquid natural gas, we should also keep some so we can quite literally keep the lights on and keep the factories running here in Australia.
Yes. And I mean, look, you know, export controls are pretty rare in general. But I think given how volatile the prices are around the world for gas and given how often we find ourselves, you know, subject to the vagaries of the global gas market, that idea that we have so much of it here certainly has some political purchase there.
and the government is taking up the case, trying to figure out how they might make this work. And what we got with the consultation draft this week is that early stages, there's still a lot of detail exactly to be figured out about how this will work, but starting to get some sense of exactly how this would look from the perspective of the gas producers.
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Chapter 2: What is the government's draft discussion paper on gas reservation policy?
And despite some criticism from the opposition, obviously the fact that it was something that Peter Dutton had proposed in the past, And as we might get into, you know, in a moment, the politics of gas and the public attitudes towards gas companies have certainly shifted on the political left and on the political right in the form of One Nation.
So I think that something of this nature will happen. And look, you know, you're right. It's a hard thing for people to wrap their heads around. I think, you know. The nature of global supply chains is such that there are plenty of things that we have a lot of that we both export and then import some for our own use.
If you looked at our food supply chains, we make a lot of food here that goes overseas and then we end up importing some back.
Chapter 3: Why is the idea of domestic gas reservation politically significant?
There are sometimes good reasons for that, but I think when it comes to natural resources and particularly gas and when we find ourselves in a position of national shortage and paying higher prices, that's certainly, I think, where the politics lie. shifted. It just hasn't passed the pub test, I think, for people, this idea that we should pay more for gas rather than in the first instance.
I mean, there's a conversation about taxing gas, but whether we should have enough of it here for our own use since it's under our ground or our ocean, what have you.
You mentioned it there. It's a rare public issue that can unite one nation and the Greens to say this isn't working. Do you think that the extent to which
These large multinational companies, the vast majority of which legally pay very little tax in Australia, have extracted huge profits from gas whilst the public has seen the impact of manufacturers shutting down of higher gas prices and through that flowing through to higher electricity prices because gas essentially sets the electricity price. All of these factors in train.
have created this situation where, you know, you do have these very strange bedfellows of the Greens and One Nation with different plans, but saying the way we're doing this, tax and gas, isn't right.
Yeah, I mean, I think clearly that is where public opinion has gone. One Nation's policy, I won't get into all the gory details of it, but last week essentially it was, you know, a higher level of royalty on gas projects, but at the same time government subsidies in essentially drill, baby, drill and more gas. So that's the One Nation way of coming at it, whereas those on the left...
might prefer less gas overall for reasons relating to emissions and climate change. I think there is broad recognition that the way that the tax arrangements were set up for the gas industry didn't necessarily pan out the way the policymakers had expected and didn't get the result that maybe they were after. Because when you're talking about taxing natural resources, it's
they pay company tax like any other company, but they're not quite like any other company. And there are differential arrangements that exist around the world for how we tax resources in particular.
And while some state governments have royalties, which are often the term that we use for a special category of taxation for resources, in the federal system, we were essentially supposed to have a federal version of that through the PRRT for offshore gas.
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Chapter 4: What are the implications of the proposed 20% gas reservation for producers?
And we'll be back in your feeds with all things fuel, but with Carrington back in the chair next week. Tom, lovely to chat. Thanks, Dan.