Incentivize Drilling To Lower Inflation – Increase Capacity With That?

Essays by Eric Worrall

RBA Governor “…One way to deal with inflation caused by a supply-side shock is to address supply…”.

Lowe says more gas could make ‘significant’ difference to inflation

Jacob Greber senior reporter
November 28, 2022 – 5:51 p.m.

Reserve Bank Governor Philip Lowe has pushed federal and state governments to provide more gasoline domestic energy market to curb inflation as federal Labor rushes to finalize a plan that could include a price cap that could potentially discourage investment in new gas wells and pipelines.

Amid calls to redistribute or shift away from export markets of existing gas resources, Dr Lowe said the focus should be on what “we can do constructively to increase” supply , which he thinks will help make a “significant contribution” to inflation control next year.

“One way to address inflation caused by a supply-side shock is to address the supply problem,” Dr. Lowe said during a Senate estimates committee hearing on Monday.

“And if we can do something about energy and rents next year, inflation will come down quickly.”

Among the options still on the table are price ceilings, which are strongly supported in government because their impact on household and business bills will be immediate.

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The apparent eagerness to embrace price ceilings rather than supply-side reform seems surprisingly reckless.

My impression is that the leftists running the Australian Federal Labor Government are ideologically opposed to allowing more fossil fuel extraction. The Victorian Labor Government has gone even further, including a ban on fracking in the state constitution.

Perhaps Australia’s new leaders truly believe that their green energy revolution will soon eliminate the need for fossil fuels. This could explain the recklessness – they don’t care that price caps will damage market confidence, because they plan to eliminate the market and ban fossil fuel extraction, right away. where renewables eliminate the need for gas.

Whatever the explanation for the recklessness, I’m glad I live somewhere warm, where I can still live comfortably when the heating in the house is gone.


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