Courage needed on gas policy

With friends and family gathered for the Christmas barbecue, there will be heated conversations. Between bites and the exchange of bowls, different takes on different topics fly around the table. It’s a rare issue these days that gets people from all points of the political spectrum to agree.

Our energy challenge is just such an issue, and specifically: “How is it we don’t have enough gas for ourselves when we export so bloody much of it?” Followed by, “And if we have so much gas, why is it now costing us so much?”

Then the outrageous question: “What about someone overseas buying our gas and then selling it on to other countries for a mint, while we’re told we’ll run low?”

There are a lot more questions – and much agreement – over the greed of big gas exporters.

This isn’t a debate driven by the intricacies of resource economics and investment dynamics. At its heart is a feeling that as a country we may have sold ourselves short. And in doing so, the sense that we haven’t lived up to our global reputation as a “plucky” country: a smaller player that is not afraid to speak our mind or to stand up for our own interests.

In a rollicking brawl for energy resources, it seems as if we’re politely holding the door open for others to snare our gas reserves, with Australia insisting: “No, you first” and “Don’t forget to leave some for us!”

This doesn’t have to be the case.

Any day now, the federal government will announce the outcome of the latest gas review. There have been more of these than hot Christmas lunches.

A lot is at stake. We can’t tinker and dither. The Australian Competition and Consumer Commission has reported that past interventions aren’t having a perceivable effect on price.

We need strong action. A complete rethink of the terms on which Australian resources serve the Australian national interest.

And there are some signs this review might be different to all that have gone before.

There’s talk of finally setting up a gas reservation plan for Australia’s east coast, mirroring the shrewd scheme set up decades earlier by Western Australia. Let’s establish the east coast version this decade.

There’s talk of prioritising gas supply to Australian industry. Good.

While we can’t see all the detail – because federal cabinet is considering the plans – we still see the same old behaviours exhibited by multinationals resisting change.

This week, United States energy giant Chevron warned that government intervention into our gas market may damage investor confidence. Woodside Energy keeps bemoaning how hard it is to do business here, while making bumper profits.

We’ve seen this all before. As the world-first social media bans come into effect, it’s worth recalling that when warned that they had to do better, big tech responded by withdrawing service.

We need better local gas pricing … For Australia, that means doing something hitherto unthought of: telling multinationals that the cost of doing business here is to provide better prices for Australians. These firms can then make up the difference through their export price.

In response to media bargaining rules and requests to pay for media content displayed on its platforms, Meta blocked content and caused mayhem for Australian users. Then it backed down.

Multinational gas firms appear happy to take a leaf out of the failed big tech playbook, warning they’ll withhold investment, while holding Australia to ransom if the government prioritises our national interest.

We must stare that threat down. We’ve done it before. The reason we have a west coast gas reservation is because then Western Australian premier Alan Carpenter rebuffed the threats of US gas companies to take their bat and ball and go home.

This generation of politicians needs to display the same spine.

We keep facing reports of potential projected seasonal gas shortfalls. Everyone knows it is not due to dwindling supply, it’s because the gas sourced under Australian soil is prioritised for customers overseas, rather than those onshore.

Pre-pandemic gas prices were about $3 to $4 per gigajoule. Today, Australian industry is paying an average of $10.30 – in many cases much more.

Yet domestic gas demand has fallen over the years. If demand drops, prices should follow –our gas prices defy the gravity of conventional economics.

Gas companies have actively resisted doing the right thing by this country and the market is fundamentally distorted. Over decades, governments have entrenched this distortion, largely by inaction, hoping the problem would mirror the properties of the product and just float away. That hasn’t happened.

We have seen signs of government courage, however. I’m proud to say in our last term, the Albanese government was one of the first to tackle this.

In late 2022, with forecasts of massive jumps in energy prices, the government capped gas prices at $12 a gigajoule, despite fierce warnings from gas exporters, our political opponents and overseas buyers. Their predictions of disaster were wrong.

Access to stable, affordable gas is not just an industrial preference. Many manufacturers need gas as a key ingredient in the production process for necessities such as plastics and chemicals. If we’re trying to rebuild manufacturing and sovereign capability, competitively priced gas will be vital.

Yes, gas will be crucial to the transition to net zero. Gas-fired power generation will shoulder more of the load as the ageing equipment at coal-fired power plants increasingly breaks down, plodding its way to retirement.

But when the argument is put that opening more gas supply will help in the transition, bear in mind recent announcements of gas field expansions are largely for supply that will be shipped to other nations using gas in the same old way – not reducing emissions, nor even preventing higher emissions.

The other argument is from overseas gas buyers, especially in Japan, who claim that giving us more access to our own gas will threaten their energy security. Yet they make this case while onselling to other countries the very gas they get from us – in eye-watering amounts.

Reportedly, last year Japanese companies onsold about 627-812 petajoules of Australian gas. That’s nearly double what we use on the east coast in one year.

This isn’t the claim of “radical activists”, it’s what the Institute for Energy Economics and Financial Analysis has determined. It’s not a freak occurrence either: the IEEFA calculates Japan has onsold more gas than it imports for its own use for four years in a row. Clamping down on onselling would free up huge supply for Australia.

With that case debunked, a new argument has been fashioned – that onselling is an important geopolitical stabiliser in our region. As if, in a global gas market, other countries are unable to set up their own supply contracts unless a third party does it for them.

Any plan for our own gas security must tackle onselling and resist the hectoring and badgering of the Japanese government and its companies. They are friends and allies, but friends and allies must sometimes be called out.

Another argument to be tackled is that things will be better if we open up more gas fields. This claim is partly right, as more supply does provide downward pressure on price – but the local price offered matters, as does the length of the supply contract.

For instance, manufacturers report they’re often unable to get contracts longer than 12 months. This is because gas companies are obsessed with profiteering, shortsheeting contract duration to capitalise on possible future price rises.

So how to address all this?

First, we need to stamp energy security as a national priority. This should reshape our approach to the management of our resources, stiffen our resolve, help us reject the idea that we just have to cop what multinational gas firms demand.

Our past timidity has allowed a structural flaw to fester: we have been forced to accept globally indexed pricing, which has no relationship to the cost of production. Australian users have had to compete with Tokyo, Seoul and others for Australian gas.

Our gas, our prices: that mantra should be our mindset. We need better local gas pricing, which reflects the average of pre-pandemic prices – effectively a third of what is currently charged.

For Australia, that means doing something hitherto unthought of: telling multinationals that the cost of doing business here is to provide better prices for Australians. These firms can then make up the difference through their export price.

This should apply to any new field, and we absolutely need to establish a gas reservation policy to meet local need.

To address onselling we should modify the so called “gas trigger” – the Australian Domestic Gas Security Mechanism – to allow our government to intervene. It should adjust future supply to nations by the amount they have resold and redirect the difference to our gas reserves.

We can honour contracts without being bullied by threats about “sovereign risk”. We can support regional energy security without neglecting our own energy security.

On top of this, major gas exporters such as Santos should be banned from buying gas from the local market to top up their export volumes.

Next, the mandatory Gas Market Code should be reformed to make 12-month gas contracts the exception, not the rule. Manufacturers need longer-term contracts to provide supply and price certainty.

Finally, we should consider investing in east coast import terminals that can bring in gas from other parts of the country. If we can ship gas to Tokyo, we can ship it to Adelaide, Melbourne or Sydney. Australia has a range of government specialist investment vehicles to support this type of endeavour, and their mandates can be rewritten to prioritise support for national energy security. It’s a stroke of the pen.

The bottom line for our country is blindingly obvious: we should not be reduced to pauper status, begging for the remainders of gas supply after export.

Our gas resources should make us an energy superpower, firing up industry and lowering energy costs for us all. That translates to economic strength.

It’s the ambition we should proudly and unhesitatingly pursue, as other nations do. It’s an ambition that suits a “plucky” country – not just a lucky one. There is nothing wrong with standing up and demanding better.

Merry Christmas to you and those you love – and enjoy your barbecue.

This article was first published in the print edition of The Saturday Paper on
December 13, 2025 as “Our gas, our prices”.

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