Realistic, and Brave
These days it’s not often, you find somebody that is prepared to state publicly what they really think, and to do so in the face of climate and energy debates charged with demonisation of providers of carbon-based sources of energy. The attack comes from an unrealistic, zealous drive to replace traditional energy sources almost instantaneously without acknowledgement of the real cost and time it will take, and the consequences.
In this setting it is refreshing to read the comments of Australia’s Reserve Bank governor Philip Lowe to a Senate estimates committee hearing last Monday, in an article written by Jacob Greber entitled More gas could help lower inflation: Lowe (28/11/2022 Australian Financial Review). The article opens with:
“Reserve Bank governor Philip Lowe has pushed federal and state governments to get more gas into the domestic energy market to curb inflation as federal Labor rushes to finalise a plan that could include a price cap that would potentially discourage investment in new gas wells and pipelines.
Amid calls for redistribution or diversion away from export markets of existing sources of gas, Dr Lowe said the focus should be on what ‘‘we can constructively do to increase’’ supply, which he said would help make a ‘‘substantial contribution’’ to controlling inflation in coming years.”
Lowe is quoted as saying realistically, and bravely:
“One way of tackling inflation induced by supply-side shocks is to address the supply side. And if we can do something on energy and rents next year, inflation will come down quickly.”
Here is somebody prepared to clearly state that the current energy cost crisis (which is contributing to Australia’s inflation) is because there isn’t enough gas supply. The way to increase gas supply, without having to resort to retrospective gas reservation, price caps, excessive taxation and like measures is to simply encourage the search for and development of more gas.
Australia’s geology is known to be gas-prone, and large tracts of the country are either undrilled or sparsely explored. Adapting the time-honoured saying “The harder I work the luckier I get”, the more I drill the more gas I find. It’s as simple as that, but in the superheated current debate about energy and climate, simple, practical truths are not popular.
Jacob Weber’s full article can be found on the Financial Review website here