How?

First, a bit of history.

Until 2020, Western Australians didn’t experience the energy price pain of their east coast cousins because all its domestic gas reserves were reserved for the domestic market. Up until then, all the gas WA exported came from offshore reserves, mostly in Commonwealth waters. That changed four years ago, when the WA Labor government allowed the export of onshore gas.

Why did the WA Labor government change the policy?

Good question.  Woodside started running out of offshore gas for its giant North West Shelf export terminal, and decided to turn to the domestic reserves to keep feeding it. But it needed some help.

Enter media magnate and fossil fuel investor Kerry Stokes and his company Beach Energy.  Beach Energy owned the licence for some of WA’s onshore gas reserves and wanted to export that domestic gas because gas sold on the international market fetches higher prices than it does domestically.

Beach Energy made a deal with Woodside to export its domestic gas.  And then it used its considerable influence to lobby the Western Australian government to let them do it.  In August 2020, while most attention was on the pandemic and the border closures, then-premier Mark McGowen announced Woodside could export WA’s domestic gas for five years – and a lot of it … the equivalent of around a quarter of the total gas used in WA!

So, what is the problem?

Woodside now wants to extend the deal for another 50 years.  And that’s terrible news for Western Australians.

See, from the moment WA began to export its domestic gas, WA gas prices were exposed to the global gas markets where prices are much higher.  Gas producers could then force Western Australian customers to compete with international customers for WA’s own gas.

In the four years since the deal has been in place, gas prices have TRIPLED in WA.  You’re not hearing a lot about that yet, because residential energy pricing is regulated in Western Australia, so state-owned energy corporations have so far absorbed the price increases (although being state-owned, you’re still paying for it, just in a roundabout way).

Those state-owned corporations tend to have long term gas contracts, so the price increases from the spot market also takes a bit longer to flow through (think of it like a fixed interest mortgage term – you may be locked in for one price now, but you know that term will expire, and you’ll be exposed to the market).  The household energy subsidies have also helped reduce the impact – but they won’t last forever either.

And it is not just gas.  Western Australia uses gas to produce a lot of its electricity, meaning electricity prices have tripled as well.

You know all those complaints about mistakes the east coast made with its gas market and what it did to east coast prices?  Imagine that happening to Western Australia … but all in one hit.

There are lots of other issues with the deal, including the devastating environmental impact.

But there are two things we know for sure – this deal will increase energy bills for WA households and Woodside will make a lot of money.

WA needs to say no.