Amid all the angst and self-interested commentary about high oil and petrol prices, especially from politicians and the Australian man in the street (aka voters) there’s a little secret no one will own up to directly. Australia is fully-mounted on the current inflationary surge in energy: our energy exports are forecast to jump 81% in value in the coming financial year alone to $88 billion! And that is going to be the main driver for the forecast surge in the estimated value of mineral and energy exports in 2008-09.
So big is the increase that the forecast value of mineral and energy exports in the coming year will top the value of all commodity exports in 2007-08: $178 billion compared to $151.4 billion.
Total commodity exports are now forecast to rise 40% to more than $212 billion for the year to June 30, 2009. If that doesn’t produce trade surpluses, when Australia will never have a chance of paying its way. The forecasts do not yet factor in any impact from the Western Australian gas supply crisis.
Not only are we riding the boom in China, India and other emerging markets, but we have hitched ourselves nicely to the surge in oil and energy costs that are driving petrol prices higher. And we have our place on the food price escalator: that’s if nature is kind to us and we don’t have a third year of drought and cut winter grain crops.
So while the Federal Government and other politicians and commentators are criticising OPEC for high oil prices, excoriating speculators for driving prices higher, and generally whingeing about how tough it is to pay $1.70 a litre, the country as a whole is a silent freeloader in this great commodity boom, and will continue to do so for so long as prices remain high.
Instead of complaining about higher oil and petrol prices, not to mention rising food costs, we should remember that without them, the Australian economy would be adrift, unemployment would be rising and wages falling. It’s much easier to afford higher petrol and diesel costs if you have a job than if you don’t have one.
The Australian Bureau of Agricultural and Resource Economics (ABARE) says in its latest quarterly forecast, out today, that the value of Australian commodity exports will jump 40% in 2007-09, up from its March estimate of a 30% rise.
ABARE says that earnings from our commodity exports are forecast to be $212.3 billion in 2008-09, compared with an estimated $151.4 billion in 2007-08, (a rise of 40%) and the March forecast of $189 billion.
For agricultural commodities, export earnings are forecast to be $30.2 billion in 2008-09, an increase of 12% from $27.0 billion in 2007-08, reflecting higher earnings from wheat, barley, cotton lint and seed, sugar, wine, pulses, canola, and sorghum. For forest and fisheries products, export earnings are forecast to be around $4.1 billion in 2008-09, 5% higher than in 2007-08. The estimate for rural exports is slightly down on the March forecast.
ABARE said the value of Australia’s minerals and energy exports is forecast to be nearly 50% higher, at $177.9 billion in 2008-09, compared with an estimated $120.5 billion in 2007-08.
In March ABARE said the total value of Australia’s minerals and energy exports was forecast to rise by 33% to a record $153 billion in 2008-09, following a forecast rise of 7% to $115 billion in 2007-08; so the value of 2007-09 exports is up $5 billion in the space of three months alone, and the increase for the coming year, has risen $25 billion.
For energy commodities, export earnings are forecast to increase by 81%, from $48.8 billion in 2007-08 to $88.3 billion in 2008-09. For metals and other minerals, export earnings are forecast to rise by 25% to $89.6 billion in 2008-09.
And, we have to remember that according to ABARE figures the mining boom was coming to an end in the March quarter until higher oil, gas, coking coal and iron ore prices intervened to renew it.
The Lucky Country strikes again, but don’t tell Australians about it. They won’t believe it.