Fossil fuel profiteering is to blame for the energy crisis

Earlier this year, the Australian Energy Regulator released its final determination on energy prices for the 2023-24 financial year, increasing prices by 20-25 percent across the country. 

If you were to listen to what far-right commentator Andrew Bolt has to say about it, you’d think renewable energy is to blame for this new assault on working-class living standards.

In recent Sky News talk show episodes, Bolt has gone on the offensive against the Labor Party’s “green transition”, warning that Prime Minister Anthony Albanese and his energy minister, Chris Bowen, are forcing Australians to pay more for unreliable, intermittent energy and regular blackouts. Nationals MP Barnaby Joyce has also appeared on Bolt’s program to argue that we could deliver cheap and reliable power to the whole country if only we would give the fossil fuel industry the money and assurances it needs.

But Bolt is wrong about where these price increases are coming from.

It’s not renewable energy pushing up the price of electricity in Australia. The Australian Energy Council reported last year that energy costs are driven down where renewables make up a greater share of energy production.

Instead, it’s fossil fuel producers and retailers that are setting sky-high prices. According to this year’s Clean Energy Council report, most energy produced in Australia continues to come from coal and gas—over 60 percent. And the industry’s growth has given these companies unprecedented power to demand an ever-greater share of profits. Disruptions associated with the war in Ukraine have also driven the price of oil and gas to new highs.

Australian gas producers, for example, have been holding the country to ransom as punishment for the modest price caps imposed by the federal government during last winter’s energy crisis. Senex, a major producer on the east coast, has refused to increase supply until it secures “workable rules” for its new $1 billion Atlas project in Queensland. 

Companies posting record profits are demanding further deregulation of the industry so that they can charge even more. Far from standing firm against this bullying, the Labor Party has dropped its proposal from late last year to tighten gas price controls.

In this context, it’s unsurprising that energy retailers feel they have the green light to push prices even higher.

In recent weeks, the cost of wholesale energy has dropped to just half the predicted price used by the Australian Energy Regulator in its calculations. Even so, retail prices remain higher.

This raises the question of why the regulator, which is supposed to keep energy companies in check and electricity prices at reasonable levels, allows retailers to get away with it. The truth is that they’re playing the same game. The regulator has argued that energy networks should be allowed to reap big profits from selling and distributing electricity, or else they’ll be discouraged from investing in energy infrastructure in the future.

The Institute for Energy Economics and Financial Analysis found that up to half of the price hikes could be eliminated if the government closed regulatory loopholes. But the obvious solution is to take back control of the production and distribution of power.

Bringing the energy sector under public control would guarantee electricity at a lower cost. The wealth and resources of the fossil fuel companies and the billions in government subsidies doled out annually to the industry could be used to jumpstart the wholesale restructuring of the electricity grid.

Bolt and Joyce may whinge about Labor’s supposed “green transition”, but there is no 

sign this is coming any time soon. Renewable power supplies have grown recently, doubling their contribution to energy production in 2017-22, according to the Clean Energy Council. But they are starting from a very low base and growing at a snail’s pace compared to the required rapid transition. With the Labor Party handing out approvals for new coal and gas projects across the country, the growth in renewables is likely to be overshadowed by the huge fossil fuel export projects coming online in the next decade.

If there’s one thing Andrew Bolt is right about, it’s that the transition to renewable energy will be expensive. The CSIRO estimated last year that at least $500 billion would be needed to overhaul Australia’s energy, transport and industrial sectors. But it’s an expense that doesn’t have to fall on working-class people. Instead, the fossil fuel companies must be made to bear the cost of fixing the crisis they have played a central role in creating.

A recent Financial Times editorial warned that “the sheer scale of the physical infrastructure that must be revamped, demolished or replaced is almost beyond comprehension”. This is also true. In Australia, for example, the electricity supply has been built around coal and will have to be completely restructured.

None of this necessary disruption to business as usual is possible without disrupting the drive for profit that is at the heart of the problem. Without challenging capitalism, the international economic transformation needed to fix the climate crisis will not occur. 

In an age of soaring energy prices and fossil fuel profiteering, and with deadly new climate change milestones passed every week, the need for a total transformation of our energy system is urgent. Wresting control from the fossil fuel companies and energy retailers and building a publicly owned renewable energy grid would enable us to kill two birds with one stone: relieving the financial pressure on working-class people and tackling the climate crisis.

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