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The state of politics in this fckn country…..
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China reserves urea while plundering Australian gas
By AKA Unconventional Economist Leith van Onselen
Late last year, the Chinese government banned the export of urea, a natural chemical component used both in fertilizers and as an essential anti-pollution additive for diesel fuel called AdBlue.

At the time, around 80% of Australia’s urea was imported from China, which has the richest supply in the world.

However, China banned the export of the chemical in order to drive down fertilizer prices in the domestic market.

China’s urea ban has potentially devastating implications for Australia’s agriculture and freight transport industries, and therefore the Australian economy. As Australian Trucking Association President David Smith explained:

“They wanted to keep their urea themselves to keep the price of urea in China down…to make it cheaper for their farmers,” Mr Smith told RN Breakfast.

“(But they) left Australia swinging, basically”…

As a result, the price of urea has increased by more than 400% since January, and the price of AdBlue has more than doubled in the last two months…

Queensland cattleman Matt Ferguson-Tait was also concerned:

“If we run out of urea, not only can’t we grow cattle, we can’t grow food, we can’t grow grain or anything like that, but even if we could , we can’t move it because you can’t spin a wheel in a truck because you don’t have AdBlue”…

“It’s more terrifying than any Covid headline, I can tell you that.”

Australia temporarily averted disaster last year when the former Morrison government awarded fertilizer juggernaut Incitec Pivot $29.4 million to produce additional supplies of AdBlue.

However, Incitec Pivot has announced that it will cease production of AdBlue at its Gibson Island plant in Brisbane at the end of 2022, which will once again dangerously expose Australia’s agriculture and freight transport industries:

“The problem for us is that if we don’t have a local factory producing high quality urea for AdBlue, we will face the same situation. [as last year] come in December of this year because urea is also used in fertilizers…and we are seeing globally with food supply issues this is having a ripple effect with increased demand for fertilizers,” [Road Freight NSW CEO Simon O’Hara said].

So what does China’s decision to ban urea exports have to do with Australian gas? First, the Gibson Island plant is closing because Australian gas is too expensive.

Australia is the world’s largest LNG exporter, as domestic East Coast gas supplies are in dire straits and East Coast gas prices have soared to breathtaking levels.

71% of Eastern gas exports went to China in 2021-22:

Gas exports
China’s two state-owned enterprises, CNOOC and Sinopec, are equity partners in two of the three LNG export facilities, making them cardholder members of the East Coast Gas Export Cartel.

Every household and business east of WA now subsidizes the foreign-owned, tax-exempt, China-responsible gas cartel to the tune of $50 billion in annualized energy costs. In turn, Australian gas effectively subsidizes Chinese industry and its war machine, while Australian households and businesses are ruthlessly squeezed by higher costs.

In turn, Australian inflation will be pushed higher, prompting more aggressive rate hikes from the Reserve Bank.

And, like urea, it will drain Australian industry and make the economy increasingly dependent on China, even as the geopolitical environment deteriorates.

The solution is for the Albanian government to do to gas exactly what the Chinese government did to urea: impose a reserve on the east coast to ensure an abundant and inexpensive supply of gas to households and industrial users. You can also apply super profits taxes or export levies to achieve a similar result.

Anyone still crying ‘sovereign risk’ has to ask themselves, ‘Why is it okay for China to reserve urea, but not for Australia to reserve gas?’

Harry L. Blanchard