Natural gas won’t stay cheap. It was cheap here in Australia 10 years ago and now it’s so expensive no one can afford to run gas heating and it’s only going up. Now (thankfully) the government has banned the installation of new gas heating and a lot of people are getting rid of gas cooking, hot water heating etc… it’s for the best.
The only reason that natural gas prices in Australia have gone up in the past 10 years is that gas producers in the eastern states were able to start exporting gas as LNG.
As of 2023, Australia is the world's second largest LNG exporter (source: https://www.statista.com/statistics/1262074/global-lng-expor...) after the US (take that Russia!) and ahead of Qatar. Great for the gas exporting cartel but not so great for ordinary Australians in eastern states who now pay the same for gas as people in Tokyo. (And Aussies wonder why manufacturers keep leaving...)
Banning domestic gas usage for new homes (which the fools running Victoria, the state I live in, have done) will do nothing for emissions but will mean that the gas cartel can make even more money exporting LNG to Asia. Bravo!
The exception is Western Australia which is also a massive LNG exporter but has stricter domestic reservation requirements than the eastern states.
What you seem to be saying is that Australians had gas that was artificially cheap because it wasn't being bought and sold at international market rates, and once that started happening and the market was no longer distorted by trade limitations, the fair market price was not longer attractive to Australian customers.
(Personally, I think all countries, to the extent that they can, ought to both reduce domestic fossil fuel use and at the same time impose strict limits on its export. We're all better off if it just stays in the ground.)
It wasn't "artifically" cheap nor was the market "distorted". It was merely the physical reality prior to the innovation of LNG.
It would only be fair to say it was artifically cheap, say, if the Australian government was imposing tariffs or subsidising production. I don't think it was doing that, and as it was, the producers were sufficiently incentivised by the market to produce and sell gas domestically.
Mail (physical means of communicating in writing and print) and email (connecting two people with digital signal) are similar but not a great comparison when comparing consumption of natural gas. Technology literally created additional markets for the same material, by modifying it so it could be transported more efficiently over long distances. I think you could say the new methods of natural gas production and storage are more efficient just as easily as saying the old methods were simply inefficient (it would have been possible to pipeline gas from AU to markets across the ocean, but it didn’t make economic sense because it would have been terribly costly and thus an inefficient use of resources)
> Mail (physical means of communicating in writing and print) and email (connecting two people with digital signal) are similar but not a great comparison when comparing consumption of natural gas.
What?
You are missing the point. We're talking about "markets" not the specific "tech/substitutes." It could be any technology disruption. Such disruption doesn't mean the prior status quo IN THE MARKET was inefficient. The tech shock just resets equilibrium.
Further, your explanation is circular, and I propose it has to do with muddling terminology and concepts.
Here's one inconsistency. Either the markets didn't exist (You said they need to be "created."), or they did exist, but a pipeline connecting them was too expensive.
> Technology literally created additional markets
> it would have been possible to pipeline gas from AU to markets across the ocean, but it didn’t make economic sense
It's clearly a bad deal for Australians, who now pay higher gas prices, but not for international importers, who probably pay less because of increased competition.
Higher gas prices is good for fighting climate change - it makes renewable energy more competitive. Now, is the opposite the case for, say the Japanese, who import gas from Australia? Are they less incentivized to switch away? Probably somewhat, but less so, because of transaction and transportation costs.
>> will do nothing for emissions
> How can that be?
Because a reduction of domestic gas usage will just be diverted to less efficient LNG exports.
Given that by far the largest source of Victoria's electricity generation capacity is from dirty brown coal [1] if anything banning domestic gas usage might even make emissions worse since it will force people to use only electricity for cooking and heating.
> Direct consumption emissions are eliminated.
Ah, so burning Aussie natural gas in Asia (after it's been liquified and then turned back into gas) is somehow better for the environment than just burning it in Australia?
The chart you link to shows that Brown Coal, as both a total, and as an overall percentage of the grid, is decreasing, with renewables increasing.
Indeed, if you look at the three Brown Coal generators in Victoria[1], Yallorn is due to shut down in 2028 taking ~30% (1480MW) of that away, followed by Loy Yang A in 2035 which will take another ~40% (2200MW) of that capacity.
So, banning new LNG appliances now, and starting that migration will have a net positive impact.
This is true even if the LNG continues to be burned overseas if it's replacing coal fired generation capacity.
Is the correct strategy to wait to regulate gas usage until every country on earth does the same? That doesn't seem like a winning strategy. Someone always has to be last.
If you want to help the environment, you regulate both gas usage and exports. The goal is to keep gas in the ground, where it belongs, not to move it to other countries.
Except gas exports are largely being used to retire brown coal burning which is even worse for the environment than LNG. This isn't an all-or-nothing deal even with exports. The richer countries should take on the costs of better efficiency first and we can trickle those technologies down to other nations as they become cheaper than LNG and coal.
It is stupid, with less Gas available on the LNG Market other LNG Producers will increase production or they will use other Energy sources such as coal.
Except that it won't be that way forever. 30% of that generation goes away in 4 years. The rate of solar and wind generators coming onto the grid is massive, putting pressure on the brown coal generators.
We are also not talking about ripping out the existing install base of appliances.
It will take at least a decade or two for that switch to reach a critical mass. That's the point when it becomes uneconomic to continue operating the domestic piped LNG network in Victoria.
It costs money to transport LNG abroad. Ships, terminal infrastructure maintenance, people, it's all overhead. Ultimately if people stop using natural gas domestically there will be a reduction in production because that overhead eats into the profits of the producers.
Interesting. Of course transporting gas across the Australian continent and selling it cheaply is a lot less lucrative than selling it abroad in lng form. So, I can see why they would focus on exports rather than a relatively small domestic market that is on the other side of the continent.
Anyway, Australia has no excuse for not using solar energy. Which is exactly what they are doing over there despite conservative governments trying to slow that down for the last decade or so. I doesn't need to depend on fossil fuels.
In the US natural gas is a byproduct of shale oil extraction and we have a limited capacity to move or export it so it's almost priced as a waste product.
It's unlikely that electricity will be any cheaper than gas soon either, since that's where 40% (and growing, as our coal and nuclear fleet are retired) of our electricity comes from.
Today solar electricity is already cheaper than natural gas and by 2030-31 solar and wind electricity cost will be 1/4 to 1/8 of today's prices looking at the avg 10% cost decline we are seeing. The advantage of natural gas being cheaper than solar was 4-5 years ago now it's no longer the case. Natural gas advantage now is of having being able to produce electricity when needed but as battery storage prices drop it will also be priced out from that market in many places with solar and wind availablity.
> solar electricity is already cheaper than natural gas
Does that include transmission? Most population centers already have the pipeline network needed to bring them gas but the getting power from giant solar projects in the desert (where it's sunny) to the eastern interconnection (where most people live) is still an unmet need.
> as battery storage prices drop
Eventually, but at present our grid-scale storage has a capacity of ~30GW on a grid of ~1200GW; it's going to take something like a trillion dollars and a generation to build out grid-scale storage to the point where we can even support a 100% renewable grid.
We'll get there eventually but until grid-scale storage is installed and ready, the gas plants (with their fast start/stop ability) are what's enabling the renewables to come online and replace our older coal and nuke plants.
We're probably going to have to lean even more on gas since the first ~500GW of renewables are replacing existing coal/nuclear we're losing, but once the grid storage tech catches up we can start installing that in lieu of new gas plants and replacing the ones we've already built.
Tl;dr: we'll get there but not in the lifetime of a furnace
“Europe remained the main destination for U.S. LNG exports in December, with 5.43 MT, or just over 61%. In November, 68% of U.S. LNG exports were to Europe, LSEG data showed.”
Of course there is a global market for all fossil fuels.
> Now (thankfully) the government has banned the installation of new gas heating
I'm sorry, but how does that make any sense, when 47% of the electricity production in Australia comes from coal?? They are banning a system that is actually pretty efficient at making heat, to instead use a low efficiency coal power plant, to produce electricity, to then use in heat pumps to produce heat. Simply, wow.
I remember a recent investor report posted on HN about declining health of permian basin, and the economics of extraction will increasingly not make sense in 10 years. Seems like no brainer if shale and by connection LNG is on way out. Might also explain Biden stalling LNG expansions especially with NATO on the hook, maybe it's cynical electioneering to his base, but maybe the future of cheap US LNG is not bright vs renewables.
Vaclav Smil's books about energy give some extra context. I have read his Power Density book (eye opening comparison of solar, wind, nuclear, fossil).
IIRC Gas extraction has an extremely high EROI (30x) initially, making it a highly productive extractive resource. But each gas well has a productive lifespan of approx 7 years requiring constant activity to sustain development.
Huge fan of Valclav Smil’s work. Note that the significant amount of water required to frack those wells is in the order of 1 million galls or more. Both sides of that is impacting the Edwards Aquifer[1]. Wastewater from wells is finally being treated, but it doesn’t seem to be a widespread practice, yet. It’s also possible that production declines after each subsequent refracking process.
The fossil fuel capitalists are so very unhappy about this ban, they are still going on about it in the financial news. I have to say, I love it. Low natural gas prices directly benefit me, and isn't it our gas?
The price has certainly come down (look at henry hub chart..), but also winter has not been too cold..
They should ban oil exports next.. (for "national security")
Actually export tariffs would be better than outright bans.
Interesting.. the same section banned any limitation on the importation of slaves... at least that clause had a sunset date. Both clauses were basically: "don't touch our cash cow".
Looking at that clause, it appears that it's only unconstitutional if the individual states do it. Doesn't say anything about the federal government or Congress. Or am I reading it wrong?
