GOT GAS: Why energy independence is such a wonderful thing
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Australians should thank their blessings that we have a great deal of energy independence. To understand why, you just have to look to Europe where prices have hit a record high on concerns about Russian supply.
Yes, there may be whinging about the seasonal price movements – particularly on the East Coast – and there are concerns about the medium-term security of domestic supply, but it doesn’t change the fact that where gas is concerned, nobody (ok no external government) gets to dictate terms to us.
And it shows. While spot gas prices on the east coast are currently going around the $9 to $9.50 per gigajoule range, the benchmark Dutch April gas contract hit a new record high of €185 per megawatt hour, or about €51.40 ($77.60) per gigajoule.
Take a minute to digest that.
Sure we remain exposed to the oil price, which has soared to an eye-watering US$116.25 per barrel, but our electricity and heating (when we get to winter) isn’t beholden to oil.
That is of course thanks to producing our own gas while Europe is beholden to Russia for something like 40% of its supply – a reliance making most, if not all, European countries have a very hard think about regaining their energy independence.
Renewables, hydrogen and even nuclear power are all options on the table for Europe to reduce or even eliminate its need for Russian gas.
However, before we get all comfy behind our extremely cheap (by comparison, anyway) gas, maybe it is time to start weaning ourselves off our dependence on it also.
But wait, you ask — don’t we still have a lot of gas remaining in our reserves?
Well yes, but also no. Sure, Australia has large quantities of gas remaining in fields around the country and in new untapped (if more expensive) shale and coal basins.
But it is still a finite resource and we are not just talking about our domestic use.
Remember that Australia is currently the world’s largest exporter of liquefied natural gas and that it makes up a sizeable chunk of our export revenue.
At some point in the future, we will run out of natural gas and that will not only put paid to it powering anything domestically, but also cut off that particular source of revenue and threaten our energy independence.
Needless to say, it isn’t too early for us to start taking at a very serious approach to developing alternatives and not just hope to plod along hoping that it will remain business as usual (I’m looking at you, gas-fired recovery).
Going hard on alternatives, such as green hydrogen, will let us get on the ground well before our competitors and leave us in a better position to ensure our energy independence when gas fails us.
It is also better for the environment, but that’s another argument entirely.