NT fracking hope misguided: Economist points out high risks and low returns
The Australia Institute has made a submission to the Northern Territory’s inquiry into fracking and unconventional gas development. The Canberra-based research organisation finds that fracking would reduce energy security and could represent a net economic loss to the Territory.
Energy security would be reduced because the NT already has plenty of conventional gas to cover its own needs. To develop unconventional gas with fracking would need the Territory to be closely linked to the volatile east coast or international markets.
“It is hard to understand why the Territory would want to be linked to the utter chaos of Australia’s east coast gas market. The NT currently has abundant, reasonably priced conventional gas, just like the rest of Australia did before it decided to bet big on gas exports based on fracking,” said Research Director Rod Campbell.
“Just look at what we’ve seen in the last week alone – the Federal Government looking to restrict gas exports in response to soaring prices, a major gas company, Chevron, busted in the Federal Court for tax avoidance and a Treasury report acknowledging that gas tax revenues are declining. Does the NT really want in on this?
“Fracking won’t bring jobs to the Territory. Gas projects are ‘capital intensive’ – they don’t employ many people. Most of those that are employed are fly-in-fly-out (FIFO) workers who spend their money elsewhere in Australia.
“Worse still, gas contribute little in royalties and taxes. A mere 0.1% of Queensland’s revenue comes from gas royalties, despite years of fracking.
“Claims that further gas production can bring “independence from Canberra” or that it is the Territory’s “only hope” are misguided.
“While the benefits of expanding gas production are modest, the costs to the public relating to infrastructure and other subsidies can be considerable. WA Treasury estimated developing the Northwest Shelf came at a net cost of $7 billion to WA taxpayers.
“NT Governments have also showered the gas industry with subsidies, spending $359 million in the 6 years to 2013-14. Even if fracked gas can be developed in the NT, it could represent a net cost to the Territory economy for years to come.
“Beyond these costs are environmental and social costs that invariably accrue to the community, not to gas companies.