Russell: Australia's Natgas Bans Risk Replicating Springsteen's Rust Belt



Russell: Australia's Natgas Bans Risk Replicating Springsteen's Rust Belt
When government policies are driven by populist politics, it is almost certain to lead to poor outcomes and a low standard of debate, as shown by the current conundrum in Australia's natural gas sector.

Reuters

(The opinions expressed here are those of the author, a columnist for Reuters)

LAUNCESTON, Australia, Sept 15 (Reuters) - When government policies are driven by populist politics, it is almost certain to lead to poor outcomes and a low standard of debate, as shown by the current conundrum in Australia's natural gas sector.

The natural gas-rich Northern Territory has become the latest of Australia's eight state and territory governments to restrict the development of the industry, by placing a moratorium on hydraulic fracturing, or fracking, of wells.

The Northern Territory move came as part of a campaign commitment by the newly-elected Labor Party government, which has promised an inquiry into the effects of fracking.

By stopping the development of new natural gas ventures, the Northern Territory has joined the populous southeast states of New South Wales and Victoria, as well as the island state of Tasmania, in stymieing a vital energy source.

The main motivation is seemingly to avoid conflict with well-resourced environmental groups opposed to fossil fuels, as well as farmers, who have concerns about the potential impact of fracking on water tables and on the availability of farmland.

But in caving into pressure groups, politicians are setting themselves up for bigger problems down the track, as a lack of supply will drive natural gas prices higher, threatening industries and causing retail energy prices to spike.

Although the Northern Territory move has been initiated by a centre-left Labor government, the hobbling of the natural gas industry is not a reflection of the traditional political divide in Australia.

New South Wales, the most populous state and home to the economic hub of Sydney, has also placed a moratorium on projects using coal seams to extract natural gas, and it is ruled by the centre-right Liberal Party, which also holds power at a federal level and in Tasmania.

Victoria has a Labor government, but its recent announcement of a permanent ban on shale and coal seam fracking represents a ramping up of the temporary ban imposed by the state's former Liberal administration.

In stark contrast to the Victorian decision, the Labor government of South Australia is appealing directly to petroleum companies to set up operations in its jurisdiction.

Tom Koutsantonis, South Australia's energy minister and treasurer, has condemned the actions of Victoria, calling it "bad news" that will constrain the supply of natural gas and increase reliance on dirtier coal-fired electricity.

"I strongly believe that the approval or otherwise of gas exploration and extraction projects should be left to independent experts, rather than to politicians," Koutsantonis said in a statement last month.

So why is South Australia so in favour on exploring for unconventional natural gas? It might be because the state is facing electricity shortages since the closure of its last coal power station in May.


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