Saturday, July 22, 2006

Australia as an Energy Superpower

This week, the Prime Minister, Mr Howard, stated that he wanted Australia to become an energy superpower, by exporting more coal, petroleum and uranium.

On the surface this might seem a good thing. But we voters also need to consider that there is an election next year and that the Prime Minister will have his own agenda for floating this idea at this time.

Some facts:
  1. Australia's Currrent Account Deficit (the amt of our money we send overseas after allowing for exports and imports) is growing RAPIDLY.
  2. Despite a strong world, and Australian, economy the A$ simply does not increase in value.
  3. the Australian economy derives less than 10% of its production from manufacturing, almost teh lowest figure amongst developed nations. New Zealand's manufacturing sector contributes more, as a %, to the NZ economy than does Australian manufacturing.
  4. Australia's net energy and resource exports are booming, especially driven by the demand from a fast-growing Chinese economy. Yet our deficit still grows, partly from increases in dividents and profits from overseas companies, and significantly from consumer-driven demand for imported goods. (partly reflected in the huge growth of personal credit debt)
Mr Howard's suggestion that Australia should become an "energy Superpower" could be because:
  1. the Australian government is concerned about the size of the (Current Account) deficit, but is unable to control it. Significantly reducing consumer demand would have a serious effect on the economy, possibly pushing it into recession.
  2. this could be seen to enhance his voter perception as an economic "manager".
  3. Mr Howard has re-started public debate about further use of uranium, including its use in Australia. Public perception of financial benefits could sway public opinion on the matter.
In fact, the suggestion might help to cover some shortcomings in the Federal Government's economic management.

Question: why would we export more petroleum, when we are a net importer?

The Analyst