I’ve recently started in a new job, so the pace of posting here at Strayanomics has slowed markedly from its pre-employment levels. My intention is to keep up with the monthly interest rate posts, the value of which I hope is now beyond doubt, along with sporadic commentary accompanying noteworthy events, when time permits.
Japan’s election this weekend is likely to be one such noteworthy event. I highlighted the potential ramifications of this election in my November interest rate update:
As I have argued in the past, Japan’s currency devaluation raises risks of a large-scale shift back to nuclear power, since the economics of importing energy is very poor when they have so much capital invested in a cheaper alternative. Prime Minister Shinzo Abe favours restarting the reactors, but public opinion remains largely hostile to this, given the Fukushima disaster. Japan’s snap election on December 14 could therefore turn out to be of considerable importance to the fortunes of Australian LNG; a strong mandate for Abe would likely see him press ahead with reactor restarts, adding more pressure to LNG spot prices.
A strong mandate appears to be what Abe will receive from this election. From Bloomberg:
Prime Minister Shinzo Abe’s ruling coalition won Japan’s general election, according to an NHK exit poll, which also indicated the bloc may maintain its two-thirds majority in the lower house.
The coalition of Abe’s Liberal Democratic Party and junior partner Komeito will win between 306 and 341 seats in the 475-seat chamber, public broadcaster NHK projected after voting ended at 8 p.m. That compares with the 325 seats the coalition held before the election. Turnout was set to fall to a record low on a combination of voter apathy and heavy snow in parts of the country.
Indeed, very low voter turnout is a big issue for the LDP. Nevertheless, this win has prevented a roadblock being thrown in the path of Abe’s plan to restart nuclear reactors next year, so it seems certain now we’ll see just this.
Japan is of course a key buyer of LNG, so a large-scale resumption of idled nuclear reactors means more stress for Australia’s burgeoning yet already beleaguered LNG industry.