How the Iran war exposed Australia’s energy mistakes

When the Strait of Hormuz closed, global gas prices doubled seemingly overnight. As one of the world’s biggest gas exporters, the spike should have meant a big payday for Australia.  Unfortunately, it hasn’t played out like that because Australia has a habit of locking in energy deals that look increasingly out of step with reality. Case in point: our long-term gas agreements with Japan.

In an extremely volatile market, Australia continues to ship gas offshore at low, fixed rates, while Japan on-sells it at a profit. As domestic prices rise and supply tightens, the consequences of this not-so-great deal are landing at home. So how did one of the world’s largest gas exporters end up with so little flexibility?

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