we’re running out of gas on this topic
Jacinta: So we need to look at why high domestic energy costs come as a shock to Chinese arrivals here in Australia. It seems the essay we analysed last time took the view that we should be capitalising on high gas prices, getting top dollar for our gas exports, and exporting even more of the stuff, including increasing production as much as possible, and not capping the domestic price but somehow offsetting the cost to local consumers through the tax system. But it seems that Chinese consumers are getting it cheap.
Canto: Yes, it’s hard to make sense of it – how is it that gas producers/retailers are making windfall profits by selling LNG to China when the consumers there are paying much less for it than we are? Is it just the sheer quantity they’re sending offshore?
Jacinta: Well, we’re not economists, far from it, so it’s a battle for us to understand it all. But I’m reading an Aussie article from a little over a year ago that puts it bluntly:
Australia [has] gas. Loads and loads of it. Far more than we could ever possibly need. It comes out of the ground at $1GJ all across QLD and SA. But then what happens to it is beyond all hope and reason. Three-quarters of it is shipped to China as LNG at $31GJ, $4GJ cheaper than it is sold locally.
That doesn’t seem to me to be that much cheaper, but the author, David Llewellyn-Smith, seems to be claiming that the cost of bringing the gas out of the ground is $1 per gigajoule, but it’s sold, presumably after much processing, as LNG at $31 per gigajoule in China. And sold here at $35 per gigajoule. Or was. And that may not mean the cost to the household consumer. I’ve been trying to find out current domestic prices, but the economic gobbledegook is beyond me.
Canto: I’ve located our last gas bill – $344.64 for 91 days usage (i.e quarterly). The usage is measured in megajoules, and a gigajoule is 1000 megajoules. Our average daily usage for the period May through July was 52.24 MJ. That’s about 4754 MJ or, say 4.75GJ used in the period. That means we’re paying around $72.50 per gigajoule. Something very wrong here, I give up. The average quarterly gas bill in South Australia is currently $218, so we’re way over. I presume that’s per domestic household. Average daily usage over winter in SA was 21.64MJ, and we’re way over that. We have only gas hot water, and we rarely ever use the gas stove. I cook on a small electric oven we bought – not induction, sadly.
Jacinta: They may be adding other costs on to the basic usage costs, but our high usage is extremely surprising, and it won’t necessarily be less in the warmer months, because we’re only using the gas for showering and washing dishes, not for heating. That means we’re likely spending nearly $1400 annually for gas. Can we change the subject now?
Canto: Well, no, we need to change our usage, not the subject. That’s assuming this usage number is reliable, and I have to be sceptical of that. Anyway, I think we can dispense with gas usage totally, at least I can. For example, washing dishes via electricity (boiling the electric kettle), and body-washing also via electricity (same system) and doing without showering. That would reduce my gas usage to zero.
Jacinta: Okay, good luck with that. We still haven’t really worked out why the Chinese are paying less for gas, or maybe for energy in general, than we are.
Canto: Well, economics bores me witless, but here we go. In 2021 China became the world’s largest gas importer, surpassing Japan. What this means for the cost to the domestic consumer I’m not sure. There has been a decline in commodity prices, including gas, in recent months apparently, but I suspect that low prices to the consumer have little to do with that. I suspect it has to do with the deviancies of the Chinese Testosterone Party – which I blame for everything in that country.
Jacinta: Haha, but is blame the word? How have they managed to shield their people from the costs we suffer under?
Canto: Anyway, our way out is to get our electric dishwasher fixed, stop using the gas hot water system, and switch off the gas tap.
Jacinta: Yes, and then we can get back to talking about bonobos and such…. Please!
References
What is the average (MJ) cost of gas in Australia?
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