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Comment by elihu | Hacker News Reader

What you seem to be saying is that Australians had gas that was artificially cheap because it wasn't being bought and sold at international market rates, and once that started happening and the market was no longer distorted by trade limitations, the fair market price was not longer attractive to Australian customers.

(Personally, I think all countries, to the extent that they can, ought to both reduce domestic fossil fuel use and at the same time impose strict limits on its export. We're all better off if it just stays in the ground.)

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It wasn't "artifically" cheap nor was the market "distorted". It was merely the physical reality prior to the innovation of LNG.

It would only be fair to say it was artifically cheap, say, if the Australian government was imposing tariffs or subsidising production. I don't think it was doing that, and as it was, the producers were sufficiently incentivised by the market to produce and sell gas domestically.

There was an inefficient allocation of resources that was disrupted by technology.

How was it "inefficient"?

A tech shock doesn't mean the old status quo was inefficient.

E.g., conventional mail wasn't inefficient prior to email

Mail (physical means of communicating in writing and print) and email (connecting two people with digital signal) are similar but not a great comparison when comparing consumption of natural gas. Technology literally created additional markets for the same material, by modifying it so it could be transported more efficiently over long distances. I think you could say the new methods of natural gas production and storage are more efficient just as easily as saying the old methods were simply inefficient (it would have been possible to pipeline gas from AU to markets across the ocean, but it didn’t make economic sense because it would have been terribly costly and thus an inefficient use of resources)

> Mail (physical means of communicating in writing and print) and email (connecting two people with digital signal) are similar but not a great comparison when comparing consumption of natural gas.

What?

You are missing the point. We're talking about "markets" not the specific "tech/substitutes." It could be any technology disruption. Such disruption doesn't mean the prior status quo IN THE MARKET was inefficient. The tech shock just resets equilibrium.

Further, your explanation is circular, and I propose it has to do with muddling terminology and concepts.

Here's one inconsistency. Either the markets didn't exist (You said they need to be "created."), or they did exist, but a pipeline connecting them was too expensive.

> Technology literally created additional markets

> it would have been possible to pipeline gas from AU to markets across the ocean, but it didn’t make economic sense

It's clearly a bad deal for Australians, who now pay higher gas prices, but not for international importers, who probably pay less because of increased competition.

Higher gas prices is good for fighting climate change - it makes renewable energy more competitive. Now, is the opposite the case for, say the Japanese, who import gas from Australia? Are they less incentivized to switch away? Probably somewhat, but less so, because of transaction and transportation costs.

Just goes to show that free markets aren't always the best for the citizens of a country.

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