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Category: Energy

07/04/2022

Ukraine- what is the future?

7 April 2022

The media is trumpeting how successful the doughty Ukrainians have been against the Russian aggressors, and the war crimes of the Russians assassinating civilians and destroying civilian facilities. There has been a lot of discussion about Russia’s lack of success; Putin’s surrounding himself by Yes-men and getting wrong information or having political insecurity or mental health problems. This is all somewhat hopeful. Russia is still immensely more powerful than the Ukraine and is likely to get control of the skies, which will give them an even greater advantage.

The West seemed surprised initially by the Russian invasion as they had assumed that if everyone was involved in trade and had increasing national incomes that there would be no war. Since 2000 Russia’s per capita income had risen much more rapidly than the European average since they had increased their fossil fuel exports.

The Social Democrats in Germany had been happy to buy Russian gas on the assumption of trade guaranteeing peace. Germany was also building the Nordstream gas pipeline under the Baltic Sea to make it easier to get Russian gas. Currently Europe overall gets 40% of its gas, 27% of its oil and 46% of its coal from Russia.

After the invasion, the West initially started sanctions in a very unified effort. The rouble fell dramatically from about 13 US cents to 7, but as European countries continued to buy the gas the Russian economy was seen to be less damaged. So the rouble has recovered to about 11, either because the Russian economy is holding up due to the continued income, or that peace is likely to be negotiated soon. Sadly, the former explanation is more likely.

Europe will take some time to make the infrastructure changes to replace Russian gas with liquefied US gas, as the methane gas has to be frozen to minus 160 degrees at atmospheric pressure before it liquefies (or minus 83 at 45 atmospheres of pressure) and then transported by ship at high pressure to ports that can distribute it. Europe currently takes 120 Billion cubic metres (Bcm) of Russian gas. Also production cannot be ramped up quickly. The US has said that it can produce and extra 15 Bcm by the end of the year and 50 by 2030. Australia and Qatar, the other big exporters do not have much uncontracted gas. Environmental limits on fracking have stopped Australia increasing production. Germany has cut its dependence on Russian gas from 55% to 40%, but major cuts would do a lot of harm to their economy. (SMH 28/3/22)

Russia will also try either to get control of Ukraine or to get some part of it, or demonstrate its power in other ways so that it can claim victory. There is a small eastern area of Moldova with a Russian separatist movement and there is a temptation for Russia to link them to Crimea by capturing Odessa and the Baltic coast of Ukraine. The idea that they are defeated may be very premature.

Here is a graph of the Rouble v. US dollar, which shows the Russian currency has largely recovered.

It is interesting that a recent (UK) Telegraph column by Ben Marlow quoted in the SMH 5/4/22 urges stronger sanctions are needed if they are to be successful.

Opinion

The West must wage total economic war against Putin

By Ben Marlow

April 4, 2022 — 11.02am

Russia’s pledge to reduce military activity around Kyiv, as part of what it calls “de-escalation”, has rightly been met with scepticism in the West, though sadly not nearly enough.

The move has prompted talk at the highest levels about whether sanctions should be lifted if Russia retreats and commits to peace. The possibility of sanctions removal was first raised by Antony Blinken, US secretary of state, a fortnight ago, on the basis that Vladimir Putin agreed to an “irreversible” withdrawal from Ukraine.

Then in an interview last weekend, Britain’s foreign secretary Liz Truss said the West could relent if Moscow withdraws and commits to “no further aggression”. This is naive in the extreme and suggests America, Europe and Britain have learnt nothing about Russia’s psychotic regime. Have they forgotten what two decades of appeasement achieved?

Putin played the West for fools right up until the invasion. Even now, Emmanuel Macron continues to pander to Russia’s warmongering leader with zero to show for nearly 20 phone conversations and a little tête-à-tête in Moscow.

Indeed there is a strong argument for doing the opposite – instead of lifting sanctions, the international community should be preparing to hit the Kremlin with a new round of even more punishing measures, not least because the current ones are clearly losing their effectiveness.

The sanctions that were imposed on Russia at the end of February were unlike anything seen before in terms of speed, scale and Western collaboration. But they certainly couldn’t be called exhaustive and the impact has clearly waned.

The Russian economy has not been crushed despite all the excitable predictions from analysts and commentators. It suffered something akin to a financial heart attack and though a full recovery will take some time, it hasn’t proved fatal and there are signs it is already on the mend thanks to the decisive action of highly regarded central bank governor, Elvira Nabiullina.

The Russian stock market has reopened after a month-long deep freeze.

A temporary stop on equity sales by non-residents, along with a short-selling ban and a short trading window, was introduced. Although there are obviously questions about how sustainable such interventionary measures are, a crash was averted.

Russia’s banking system has stabilised. Measures such as capital controls and freezes on foreign exchange deposits have helped to prevent a run on the country’s banks.

The West needs to leap into action, pressing home its advantage with a new round of sanctions that completely devastate the Russian economy, starting with a full energy embargo. Without that sanctions will ultimately fail.

Helped by a doubling of interest rates and a ban on residents transferring money out of Russia, the rouble has staged a strong rally. After slumping as much as 33 per cent against the US dollar the day after Russia’s invasion, it is now close to pre-war levels of 85 to the dollar. It might have been a nice soundbite but the rouble has not been “turned to rubble” as Joe Biden declared last week in Poland.

Much of the recovery is artificial but as long as oil and gas receipts continue to flood into the country, Russia can keep rebuilding its hard currency reserves and weather the storm.

“Self-sanctioning” in the shipping industry has been a resounding failure. Oil tankers continue to arrive in Russian ports. Traffic in March has been only slightly lower than it was a year ago, and is higher than it was during the same month in 2016 and 2015, according to research from the Institute for International Finance. Even when the discount on Russian crude is factored in, oil revenues are near record levels, the IIF says.

That’s not to say that sanctions have been toothless. Goldman Sachs is forecasting a 10 per cent downturn in Russia this year, while Barclays predicts a 12.4 per cent slump. But while Barclays expects another 3.5 per cent decline in 2023, Goldman thinks growth will have returned already with GDP expanding by 2.4 per cent and has pencilled in a record current account surplus of $US200 billion by the end of the year.

Germany could withstand the shock. Robert Habeck, its own economic minister, has admitted that it would at least be able to make it through the summer. It is just too afraid to inflict further hardship on the German people, but if Lithuania and Poland are prepared to then why shouldn’t Europe’s biggest economy? They are even more dependent on the Kremlin’s oil and gas.

It may not come to that, of course, if Putin follows through with a threat to turn off the taps because the West refuses to meet Russian demands to pay for gas in roubles.

There also needs to be a widening of the ban on Russian banks using the Swift payments system. Just seven have been cut off from using it, and of the five biggest, Sberbank is the only one that has been shut out.

What else can be done? Wally Adeyemo, the US deputy Treasury secretary, has talked about additional export controls – some experts advocate for a full commodities ban or at least a broader raw materials embargo – and Volodymyr Zelensky has called for a trade and shipping blockade, something Adeyemo has refused to rule out. There should also be punishment for Western companies that continue to do business in Russia.

But as things stand, if the price Putin was meant to pay for his invasion was the crippling of Russia’s economy, then sanctions have undoubtedly failed.

Telegraph, London

15/09/2021

Uncontested Grants for NT Gas Exploration Despite Court Proceedings in Progress

15 September 2021

Federal Resources Minister Keith Pitt gave $20 million for gas exploration for fracking in the Betaloo Basin in an uncontested grant. The grant was to Empire Energy that donates to both major parties, but seems to prefer the Liberals as they flew Energy Minister Angus Taylor and Liberal fundraiser, Ryan Arrold around the NT site (Guardian 20/8/21).

The Betaloo Basin is in the centre of the Northern Territory, and the grant application was the subject of Court proceedings brought by the Environmental Centre (NT) and the Environmental Defenders Office. It seems that undertakings were given not to give the grants, but they went ahead despite the assurances given to the Court. The Australian Government Solicitor (AGS) said somewhat lamely that they can only do what their clients say. The Resources Minister, Keith Pitt was criticised by the Federal Court judge, Justice John Griffiths, but it seems that this will make no difference either to the outcome or to the Minister’s career. Presumably the idea that he would be charged with contempt of court is fantasy.

We seem to have reached the point of a third world country where the Government gives whatever it likes to its mates and due process is a distant memory.

Labor might be marginally better, but the benchmark has now been set very low. Companies are becoming accustomed to governments bending to their will and will be reluctant to leave the ‘new norm’. The only answer is a Swiss-style democracy with referenda as the main source of power and citizens able to overturn government decisions. We need proportional representation and an end to the two-party duopoly so that all decisions are made on the floor of the parliament, not in back-room deals. This will take a change to the Constitution, but this well overdue in any case, and we might as well do a thorough job of it. The Swiss also have provisions to change their constitution without a fuss.

www.theguardian.com/australia-news/2021/sep/14/no-satisfactory-explanation-court-blasts-keith-pitt-over-grant-agreement-with-gas-company?fbclid=IwAR3v_4oGwTWFkiQ2xYp_l9Mjw2alDLARFN_St8hwoDbEp_MRup44fFbfXaU

17/07/2021

Giving out Jobs to Perpetuate the Status Quo

17 July 2021

The composition of the US High Court, especially on the issue of abortion has had more publicity in Australia than our own stacking of the judiciary and major government bodies. Where are the records of all this? Has it just continued quietly under the radar with George Brandis and Christian Porter?

The Liberals have been masters of putting conservative people and ?mates in the judiciary and on bodies such as Clean Energy, which they did not manage to abolish. This will naturally make it very hard for the country to move on when they are voted out. The judiciary are appointed for life- about the only people in the country left in that position, and these major Government bodies have appointments with quite long tenure, so that change will be both hard and delayed. Years ago these problems would have been in the hands of relatively unsackable career public servants.

We presume that Matthias Cormann had a miraculous change toward clean energy once he got to the OECD and did not have to toe the Morrison government line. But people who have spent their working life in an industry are unlikely to do the same. Once again it is the Liberals standing in the way of progress for as long as they can.

Taylor appoints another fossil fuel executive to a key clean energy body

25/04/2021

Electric Vehicle (EV) Policy

25 April 2021

The Federal Government has discouraged EV uptake and now the Victorian Government wants to tax them to replace the petrol tax that pays for roads.

This is very silly. Roads do not have to be paid for by petrol tax. Any sort of tax will do. Taxes should be used to encourage sensible behaviour, not discourage it.

One other important aspect is ignored in this video and in most discussions about EVs. That is their possible use to stabilise the electricity grid. If they are charged when there is a lot of renewable energy, e.g. in the solar peak during the day, they can be discharged in the evening, so lessening the evening peak. If EV owners paid the day rate to charge and go the evening rate to discharge, they would make money and offset their vehicle cost.It might be noted that AGL (an electricity supplier) is encouraging electric vehicle fleets so that it can use their batteries to do just this, but hey, why would the government let little people in a on a good deal?The action point here is the write to Victorian Govt to stop the tax and facilitate the grid stabilisation by allowing EV owners to pay and be paid at the rate at the time they charge or discharge.

Please do this if you live in Victoria.

https://www.facebook.com/thejuicemedia/posts/306478977513607

19/03/2021

Interested in Clean Air?

19 March 2021

NSW has a draft Clean Air Strategy and have invited comment.My contribution will be to help solve the climate crisis by introducing electric cars as a major policy initiative. If they were principally charged using renewable energy they could lessen emission from transport, lessen emission from coal fired power and also even the demand for power by plugging in to homes in the peak period and discharging their batteries. The average home battery has less than 10kWh. The new Nissans about to be released have 40kWh. If they were programmed to charge when power is cheap and renewable, and discharge when power is expensive they would be a very major power store, when the fossil fuel lobby (not to mention the Federal Govt.) is talking about needing (fracked) gas for peak load reliability.

www.environment.nsw.gov.au/topics/air/clean-air-strategy/draft-nsw-clean-air-strategy-public-consultation

06/03/2021

Insurance for Farmers with Coal Seam Gas

6 March 2021

I have minimal faith in insurers. Many years ago, one of my friends was killed falling down a crevasse hiking on a NZ glacier. A meticulous person, he had checked his AMP insurance before he left- the only exemptions were scuba diving and private flying. The company told his widow with her 6 month old baby that it was a dangerous sport and he was not covered and the broker he checked with had no right to say that he was covered. They offered her half. She was of substance, hung on and they settled on the steps of the Supreme Court rather than go on with their unwinnable case.Another friend had his house burn down, and was only given the depreciated value rather than the replacement, which was about half; small print as usual- do you feel like fighting Goliath?An acquaintance, who was a merchant banker with a lot of money got a nasty brain tumour and needed expensive chemotherapy. The gap between his Top Cover health insurance and what the bills were was so great that he left St Vincent’s Hospital and readmitted himself to Westmead as a Medicare patient. (Sadly the medical outcome was as expected).Every day I see people injured in Workers Comp or motor vehicle accidents have their treatments denied by insurers on grounds that could only be called spurious. In my practice’s statistics IAG (NRMA) refuse a higher percentage of treatments than any other insurer.It is, of course, impossible to say that fracking for Coal Seam Gas is safe. It involves breaking the rock strata to let the gas come up. Presumably these fractures will also let the water move to a lower level and be less available to the surface. And chemicals are pumped in so that the water may not be fit to drink, and there is no natural mechanism to purify it. Now unsurprisingly the insurers do not want to cover the farmers. For once I am on their side. Fracking is simply not safe. The gas companies will get their gas and move on-the farmers may have land that is useless, or at best less productive than it was before. Because of the nature of the law, farmers only own the surface of the land- mining rights are a separate thing, which is why the government can give companies the right to do what they like below the surface. The government needs to stop this- it should not be left up to the farmers. What a neat piece of nonsense that they are now supposedly protected from Public Liability claims- it might protect them if they are defendants, but it is far more likely that they will be plaintiffs!

www.abc.net.au/news/2021-03-05/big-on-spin-light-on-detail-as-gas-industry-touts-new-insurance/13216226?fbclid=IwAR26XpOCZk9aqusgrEukN44T-esmX-OhNFe4sgj4X7A9-Drtt9_3V-L6SxY

06/03/2021

JobKeeper becomes an Unaudited Subsidy to Big Business

6 March 2021

It seems that while JobKeeeper did help employees, some businesses did not actually need it, but got it anyway. Now it is ‘moral issue’ that they give it back- that is to say it is voluntary. If they have already taken it as executive bonuses or shareholder dividends it is probably not refundable.

The welfare recipients who had spent money and were accused retrospectively of Robodebt could not repay it either, but were hounded till the end. All that will happen to the big end of town is a few days of newspaper articles.

It is surely a reasonable principle that if taxpayers’ money is given away there should be monitoring of where it goes. If it was too hard to set up a monitoring system quickly, the obvious solution would be to make a regulation that it had to be used for purpose and would be checked and there would be prosecutions if it were misused. This would have allowed follow up, a few prosecutions and majority compliance. This government seems incapable of any sensible management of anything, unless you think that deliberately handing money to mates is an unwritten policy.

Now even small businesses are annoyed.

www.smh.com.au/politics/federal/pretty-close-to-theft-small-business-slams-big-corporate-jobkeeper-profits-20210304-p577sn.html

27/02/2021

Electricity Pricing in Crisis Situations

27 February 2021

Texas just had a major problem with electricity supply caused by an extreme weather event and the fact that their grid was not connected to the rest of the USA to allow them to import power to the state. But Australia has a similar market-driven model where generators bid to put electricity into the grid. The price is set by the last bid to get to the quantity that is needed. This allows the gaming of prices by collusion between generators, which is probably the reason that prices have remained high- the competition that is supposed to lower prices is ‘imperfect’. Interestingly, no one gives this as a reason.

Most Australian retailers buy power, average the wholesale prices and sell to the consumer. Wholesale prices on the National Energy Market vary widely and can be watched for free in real time on apps such as NEM Data.

When a massive weather event occurred in Texas the wholesale price went through the roof. Would our bills be similarly affected? Possibly, as when South Australia had a similar problem their connection to the national grid was blown down.

A few electricity retailers in Australia merely sell at the wholesale price and take a fixed supply fee, which is cheaper unless huge price spikes come due to unforeseen events.

One aspect that has been neglected in public discussion in Australia is Demand Management, which involves cutting demand, rather than increasing supply. It would be possible, for example, to have customers notified that prices were very high and have them shut off unnecessary power, such as air-conditioning. This could be refined to be more selective, turning off the cooler but not the fan intermittently. It could even be done remotely and houses could have circuits that could be cut off if power was short, and circuits that were considered vital, like lights and frigs.

It would be possible to get an SMS us to tell us that power was very expensive and to turn off whatever was possible. This assumes the customer is on wholesale prices- otherwise it is the retailer’s problem. But the issue and some technological and behavioural options need to be discussed.

In the meantime I am on wholesale pricing and am writing to my retailer about SMSs.

https://theconversation.com/texas-was-a-warning-australia-needs-to-rethink-the-design-of-its-electricity-market-155856?utm_medium=email&utm_campaign=The%20Weekend%20Conversation%20-%201874518280&utm_content=The%20Weekend%20Conversation%20-%201874518280+CID_4970c3abdf247db828ca44fdfbdfbc9a&utm_source=campaign_monitor&utm_term=Texas%20was%20a%20warning%20Australia%20needs%20to%20rethink%20the%20design%20of%20its%20electricity%20market

20/02/2021

Mental Health and Cheating

20 February 2021

I like to think that my credentials as a mental health advocate are pretty good. I was responsible for the NSW Parliamentary Select Committee of Inquiry into Mental Health in December 2001 which reported in 2003. The result of this inquiry was an increase in the mental health budget in the following year of $320 million, a new accounting system so that the money could not be transferred by hospital administrations to other areas, and publicity which led to a similar Senate Inquiry in Canberra. This reported in 2006 and led to psychologists being put on Medicare. (Not that my contribution was noticed by the Parliamentary press gallery).

One of the elements of recognising mental health is having it treated the same as physical health.

But I am also a tennis fan, not a tragic, but a fan. In the quarter finals of the Australian Open, Ash Barty, Australia’s favourite and No 1 seed was eliminated by Karolina Muchova of the Czech Republic. This might not be remarkable were it not for the fact that the game had Barty winning easily until Muchova took a 10 minute medical timeout. After this, the game and momentum swung totally Muchova’s way and she won. Muchova admitted that she wasn’t injured, she just took time off to get her head together. Obviously she did that, and Barty was sufficiently disconcerted to lose the match. The public waited the 10 minutes and the TV filled the break as usual.

Barty was magnanimous in defeat, saying that Muchova had the right to take a medical break, but one has to ask whether taking a 10 minute break to compose one’s head if one is not doing well in a match will become the new norm Hey, there is no rule against it, and now a precedent for it!

It will be hard for a tournament referee to say to a player, ‘I do not accept you injury, get back on and play’, but what is the alternative? This is a bad precedent. This is not mental illness. Any suggestions how it should be dealt with?

20/02/2021

Federal Auditor-General Defunded- Government cuts teeth of watchdog

20 February 2021

What else would a PR driven government do to lessen criticism of its rorts?

Here is an SMH article today by Katina Curtis entitled:

‘Cuts Mean Government Agencies will avoid scrutiny’.

The watchdog in charge of keeping the government accountable for its use of taxpayer money says his budget has fallen so much, some agencies might only face scrutiny once every 20 years and auditors are tolerating ‘‘uncomfortable’’ risks in financial statements.Auditor-General Grant Hehir says over the next four years he has to cut the number of performance audits his office does, which in the past year has uncovered the sports rorts scandal and the $30 million paid for the Leppington Triangle land valued within a year at just $3 million.The cut will reduce the number of audits by a quarter, from a historical average of 48 a year to 36, the lowest number this century, bar 2016 when the double dissolution of Parliament meant fewer sitting weeks to deliver his reports.‘‘In effect, I am unable to provide the Parliament to the same extent with the evidence it has used to hold executive government to account, thereby reducing accountability and transparency,’’ Mr Hehir yesterday told a parliamentary committee reviewing the Australian National Audit Office.Over the past two years, the performance audit section has lost 20 staff, equivalent to the capacity for eight audits. ANAO funding as a proportion of government spending is now half what it was 10 years ago.‘‘Should it be going up proportionately? I’m not arguing that, but I think it shouldn’t be going down,’’ Mr Hehir said.Since 2013, the Australian National Audit Office’s budget has been cut by nearly $6.3 million – or more than 22 per cent in real terms – although Mr Hehir told the committee ‘‘we probably wouldn’t use the word cut, it’s fallen’’.While the budget has shrunk, the number and complexity of financial statement audits the office must do has grown. Mr Hehir said the budget squeeze meant he’d had to increase the risk tolerance of these audits to a point where he was ‘‘uncomfortable’’.As well as a reduced number of audits, their scope will be narrower, and they will focus on higher-risk activities in large entities such as the Tax Office and the Defence Department.‘‘Many smaller agencies may not be audited for extended periods of time, potentially over 20 years,’’ Mr Hehir told the committee.