So, a little follow up from the Mark Mcgowan-EPA story.
Roger Cooks basically said today he’d back the mining industry peeps over the rest of WA.
I don’t think he meant it to come across that way. But if your not in the mining industry, well it seems your pretty low priority. Or am I taking his words too negatively?
We have a huge part of our economy depending on fossil fuels (gas). A short sighted solution but that’s where we are. How do we grow out of this?
If WA starts throttling the gas production we have to be looking to other things of global value to sell.
For a rosier outlook, where a larger time period is taken into account, and their models include network effects, i also found
‘APPEA WA investment analysis EY final report’
A lot of ‘coulds’ and ‘ifs’ in there though, but there good info also.
Okay, if you were talking about energy mix and gases impact on the economies functioning, and not the export economy. Then your first statement absolutely stacks up. For info, 54.5% of our energy generation is gas, and all but 2.3% is Fossil Fuels. https://www.energy.gov.au/data/australian-energy-mix-state-and-territory-2020-21
But the second part of the comment is about production for export and how much value LNG is to the WA economy. And i’m not sure that stacks up.
For example
Trying to look up royalties I’ve found $14.18 Million in 2022 from the Petroleum industry as a whole was paid. Didn’t see LNG on its own, but its probably most of these stats. https://dmp.wa.gov.au/About-Us-Careers/Latest-Statistics-Release-4081.aspx
Having a look at ‘Western Australian Mining and Petroleum Statistics Digest 2021-22’
The income from LNG was $38 000 000 000, so thousands of billions, for the period, largely due to more than doubling market prices.
Petroleum Royalties are quoted as being $8.5 Million. $6 more than 2020-2, but we’re still talking loose change. For comparison the top commodity Iron ore $10,848. Million
In employment terms, 1237 full time equivalent jobs for the period.
I don’t know how much I believe this average, but base pay average for the industry is around $75,000p.a. Which would make the wages in the region of $93 Million, less insurances and the like. But they could go to offshore insurers for all i know https://www.payscale.com/research/AU/Industry=Oil_%26_Gas/Salary
I won’t look at dividends because so much will go offshore or over east, and I don’t know i could access enough information to make that a worthwhile exercise. Suffice to say U.S.A. and UK are Australia’s largest investor origins, and most superannuation companies/banks in Australia aren’t based in Perth.
So, maybe around $100 Million is being injected into the state per year from the petroleum industry. By my very quick guess-timate. I don’t think this industry is do or die for us from that perspective, we aren’t very diverse in our offering but petroleum isn’t like Iron Ore has become. And we aren’t getting much for the current value of the export, though i didn’t include any company tax.
Note: It is a commodity whose control and supply can have serious geopolitical impacts which should be remembered.
I am not an economist so I am out of my depth here. So you’ll have to forgive my ignorance and educate me. Clearly this is something you know a bit about. Don’t you count gas a fossil fuel? I would.
Clearly I am confused where this value is coming from and perhaps it’s not export.
Anyway fossil fuels (including gas) are a big part of our economy and we should have a path to phase them out if we are going to reduce our environmental impact.
$38 000 000 000 seems like a lot income to start taking out of the equation.
I feel my point is, if we’re going to reduce our dependancy on fossil fuels we need to recreate value somewhere else in order maintain our economy and ultimately our standard of living. So how do we do that and what might that look like?
Gas is absolutely a fossil fuel. And as my first paragraph says it is the lynchpin of WA’s power supply.
Trying to understand where the confusion lies in ‘don’t you count gas as a fosiil fuel?’, i think you were misdirected by my wording ‘all but 2.5% is fossil fuels’. Another way for me to say that is, ‘2.5% of WA’s power generation is from renewables, and the rest is fossil fuels, of which Gas is the major part.’
The question is, ‘How much value is captured by Western Australia as people and place from the LNG, and thus petroleum industry?’
$38 000 000 000 is a lot of income for the petroleum industry. But $100 000 000 is my surface level guess at how much of that actually goes into the pockets of Western Australians, so quite a small fraction of the total. (Note: There are other monetary and non-monetary benefits to the industry i’ve ignored, because ‘too hard’).
Your last paragraph in this response confuses me again. But i’ll see if I can address it. There is value to the industry, but it could reasonably be replaced by other minerals, such as, rare earths that are tipped to explode in price this century.
Its impact on our economy in monetary, (not energy supply), terms is not like Iron ore, in which we capture a great deal more value through royalties. To “recreate value somewhere else”, isn’t the right way to look at any industry, it supposes the economy is a static beast, where like for like can be replaced, it is not, especially WA, as demand in a commodity we own surges we should have a windfall, but high demand doesn’t last forever, and droughts occur. This is a possible prospect we may be starting to see with Iron Ore and Chinese demand.