theglobeandmail.com
Australia's LNG Export Model: A Warning for Canada
Australia's LNG exports tripled gas prices, transferring wealth to corporations and depleting reserves; Canada faces similar risks.
- What are the immediate economic consequences for a country that exports significant amounts of its natural gas via LNG?
- Australia's experience with LNG exports serves as a cautionary tale for Canada. Prior to 2015, Australia had abundant low-cost gas, but LNG exports tripled wholesale prices to over \$12 per gigajoule, then to \$50 during the 2022 energy crisis. This transferred wealth from households and businesses to gas corporations, and depleted low-cost reserves.
- What long-term systemic risks does Canada face if it follows Australia's path of prioritizing LNG exports, and how can these be mitigated?
- Canada risks replicating Australia's negative experience with LNG exports. Increased reliance on global gas prices, coupled with potential depletion of low-cost reserves and the need for new electricity generation capacity to support LNG production, could lead to significant price increases for Canadian consumers and businesses, impacting energy security and economic stability.
- How did the structure of the Australian gas market and the actions of gas producers contribute to the tripling of gas prices after the start of LNG exports?
- The Australian gas market shifted from domestic abundance to global price exposure due to LNG exports. Gas producers, initially claiming low domestic prices would persist, instead exported domestic gas, exacerbating shortages and price hikes. This highlights the risk of prioritizing export profits over domestic energy security.
Cognitive Concepts
Framing Bias
The narrative is structured to highlight the negative consequences of LNG exports in Australia, using strong emotive language and emphasizing the losses experienced by Australian households and businesses. Headlines or subheadings (if present) would likely reinforce this negative framing. The introduction immediately establishes the negative consequences of gas exports and maintains this focus throughout the article. This creates a strong bias against LNG exports and ignores any potential positive effects.
Language Bias
The author uses loaded language such as "price gouging," "devastated," "windfall profits," and "drained us" to portray LNG producers in a negative light. These terms are emotionally charged and lack neutrality. More neutral alternatives could include 'increased prices,' 'affected negatively,' 'significant profits,' and 'reduced reserves.' The repeated use of negative phrasing strengthens the overall negative framing of the issue.
Bias by Omission
The analysis focuses heavily on the negative consequences of gas exports in Australia without providing a balanced view of potential economic benefits or alternative perspectives. There is no mention of government regulations or policies that might have exacerbated the situation, or of efforts to mitigate price increases. The omission of counterarguments weakens the overall analysis.
False Dichotomy
The article presents a false dichotomy by suggesting that LNG exports inevitably lead to high domestic gas prices and economic harm. It doesn't acknowledge the possibility of effective regulation or alternative scenarios where benefits could outweigh the drawbacks. The simplistic framing of 'export = bad' ignores the complexities of energy markets and policy choices.
Sustainable Development Goals
The article highlights how LNG exports led to a tripling of wholesale gas prices in Australia, causing significant financial strain on households and businesses. This directly contradicts the aim of SDG 7 (Affordable and Clean Energy) which promotes access to affordable, reliable, sustainable, and modern energy for all. The situation in Australia serves as a cautionary tale for Canada, warning against similar negative impacts from LNG exports.