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| Image courtesy Wikipedia |
Every day, gentle reader, we are bombarded through the media with stories about energy costs, and how they are entirely the fault of the current government.
It's worth looking at the recent history to try to understand the reasons for price increases and to attempt to analyse exactly what has happened.
Australian energy costs began to rise as far back as 2015 when the east coast gas market opened up for large scale international exports which tied local east coast prices to global markets. These global markets price gas much higher internationally, and hence the vast gap between east coast and west coast prices as illustrated below.
In 2022 the prices of electricity and gas spiked dramatically. Some reasons for this were developments in the international situation, including the Russian invasion of Ukraine and global supply chain issues. Locally, wholesale generation costs rose by as much as 140% in early 2022. Outages in aging local coal generators also contributed to costs. When a plant fails without warning, a large block of power can be removed from the grid, and the market reacts by pricing upwards accordingly.
Over 60% of Australia's coal fired generators are more than 40 years old. Metal pipes and turbines crack and wear out after 40 years.
The Coalition's claim that Net Zero is responsible for energy price rises is not substantiated by the facts.
It has more likely had the opposite effect, as shown by recent CSIRO reports. Wind and solar are the cheapest forms of new power generation.
But it's worth going back a little further in our history. Much of the energy generation and retailing industry was privatised in two waves, the first in the mid to late 1990s, and the second between 2010 and 2015.
Privatisation was supposed to provide greater efficiency, and the assumption that this would lead to cheaper electricity was made in the process of selling it to the voter. It hasn't. So what was the point of it in the first place?
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