Australian federal election 2022: Albanese seizes on PM’s ‘bulldozer’ admission; Chinese spy ship off WA coast ‘an act of aggression’, Dutton says

With prime minister Scott Morrison apparently scheduled to address the oil and gas lobby at Appea’s conference in Brisbane next week, it’s interesting to note a couple of big energy trends now underway. (Assuming floods don’t affect proceedings.)

Last month, we reported here that March average wholesale power prices were up 141% from a year ago in the national electricity market, to $87 per megawatt hour. Gas prices were also up two-third to just under $10 per gigajoule.

Now, according to data from consultants EnergyQuest, power prices have jumped further. In Queensland, they were up about half again to $220/MW-hour, while those in NSW were up almost 90% to $187/MWh. (Prices were at $500 late on Thursday in both states.)

Victorian prices almost tripled to $141 and SA’s more doubled to $152.

Global thermal coal prices have been surging but another factor is the soaring price of gas because that fuel often sets the price in the market once renewables (effectively zero cost fuel) and coal plants have bid in.

EnergyQuest says short-term Queensland domestic gas prices in April were up about half for the month at $16.34/GJ at Wallumbilla, with slightly smaller rises in other states. By early May, Wallumbilla’s prices had increased another two-thirds to $25.39/GJ, while Adelaides had reached $41.86/GJ. The report by EQ’s head, Graeme Bethune, said:

The climb in prices appears to reflect several demand and supply factors in both east coast gas and electricity.

Those with memories stretching back to Australia Day may recall the Morrison government was ‘considering’ helping Europe’s looming energy crunch ahead of Russia’s invasion of Ukraine. Well, EQ has been watching out for that too.

April’s shipments of LNG totalled 6.38m tonnes in 92 cargoes, down slightly from 6.41Mt in March (a longer month). Revenues were $5.52bn, nearly double from April 2021.

China may be sending us spy ships, as defence minister Peter Dutton just told us, but we’re more than happy to send them vessels of LNG.

Last month, Australia sent three extra cargoes to the Middle Kingdom compared with March levels, but 15 fewer to Korea and Japan. “There were no cargoes delivered to Europe,” Bethune noted.

And as for Australia’s ability to tap into $45/GJ global gas price, well that’s been fairly limited too. According to EnergyQuest, only 2% of total shipments last month were sold at spot prices, with the rest presumably delivered at long-term prices.

Households will probably be wishing they too had long-term contracts once those higher wholesale gas and power prices start turning up in our utility bills.