Australia’s gas export model has delivered record profits for producers but left manufacturers grappling with soaring energy costs, threatening the nation’s industrial future. Comment – Geoff Crittenden, CEO, Weld Australia.
After years of calls for a national strategy to rebuild sovereign capability, the rhetoric around Australian manufacturing has finally shifted. Government agendas like the Future Made in Australia policy have signalled renewed ambition.
But while the vision is both positive and commendable, our industry cannot thrive on ambition alone. We need structural change, and we need it now.
Nowhere is this more urgent than in the cost and reliability of energy. New research from The Australia Institute confirms what manufacturers have been saying for the past decade: gas exports have pushed Australia’s energy prices to unsustainable levels.
Since the start of large-scale gas exports in 2015, wholesale gas prices have tripled, and electricity prices have doubled.
These are not marginal increases – they are existential threats. For an energy-dependent sector like manufacturing, this is a crisis.
How did we get here?
The decision to allow large-scale exports of Australian gas from Queensland was made in 2010. At the time, industry and experts warned it would expose domestic users to volatile global prices, ending decades of low-cost gas supply that had underpinned industrial growth. Those warnings were ignored.
The results speak for themselves.
According to The Australia Institute’s analysis, east coast gas prices rose from an average of $3.33 per gigajoule before exports to $9.67 per gigajoule today – a staggering 190 per cent increase. During peak crisis moments, prices spiked as high as $35 per gigajoule. Electricity prices, which are heavily influenced by gas generators setting the price in the National Electricity Market, have followed suit, increasing by 73 per cent since exports began.
These rising costs have had profound implications. Some manufacturers have closed their doors, investments have stalled, and the competitive edge has been lost. While gas exporters post record profits, Australian manufacturers are being priced out of their own market.
A system unfit for industry
The most frustrating part? This outcome was not unforeseen. In fact, some gas companies openly acknowledged their intent. In 2014, Santos told investors that one of the objectives of the Gladstone export terminal was to “raise the domestic gas price”. This wasn’t a side effect. It was part of the business model.
Gas exports were never structured to protect Australian users. There is no robust domestic gas reservation policy on the east coast. There are no enforceable safeguards to prevent exporters from selling uncontracted gas to the highest bidder, even if that means short-changing domestic manufacturers.
In effect, Australia has created a system that prioritises exports over national industry. We are one of the world’s largest gas producers, yet face chronic gas shortages and skyrocketing prices at home. It is economic insanity.
The cost to manufacturing
Manufacturers, particularly those in heavy and advanced industries like metal fabrication, rely on affordable and reliable energy to remain globally competitive. Gas is not just a source of heat or electricity. It is often a feedstock, a critical part of the production process. High gas prices flow directly through to higher input costs, eroding margins and pricing Australian products out of both domestic and export markets.
Electricity prices, driven upwards by the same gas dynamics, add another layer of pressure. Energy has become a double blow. Every time prices spike, manufacturers are forced to make impossible decisions. Do they cut production, delay hiring, pass costs onto customers, or worse, shut down?
The impact is not limited to businesses. Workers lose jobs. Communities lose economic anchors. And Australia loses capability, resilience, and the opportunity to lead in the industries of the future.
The myth of scarcity
We are often told that the only way to lower prices is to increase supply through new gas projects. But the data tells a different story. Since 2015, gas production on the east coast has tripled. Yet prices have soared. Why? Because nearly all that additional gas has been exported.
The gas industry has succeeded in creating artificial scarcity in the domestic market. New projects don’t ease the burden. They make it worse by increasing export volume. Until we fix the structural settings, more gas means higher profits for exporters and more pain for Australian businesses.
Time for action
The solution is not complex but it does require decisive political will and real action. At a minimum, we need:
• A robust east coast domestic gas reservation policy: This must ensure that sufficient volumes of gas are available to local industry at reasonable prices, especially during periods of peak demand.
• Export controls on uncontracted gas: If manufacturers cannot access affordable gas, then uncontracted exports must be capped or redirected to the domestic market.
• Targeted investment in electrification and renewables for industry: We must help manufacturers transition away from gas dependency, with government support for technology adoption, grid upgrades, and renewable integration.
• Reform of the National Electricity Market: The current system allows gas generators to set electricity prices in a way that distorts the market. We need a pricing structure that reflects real supply and demand, not manipulated scarcity.
None of this is radical. Western Australia already has a domestic reservation policy that has kept prices lower than the east coast. Many international jurisdictions actively regulate energy exports to protect their domestic industries. We are not asking for special treatment. We are asking for fair and strategic policy.
The bigger picture
Australia is at a pivotal moment. We are preparing for one of the largest industrial transformations in our history, driven by decarbonisation, technological innovation, and global supply chain shifts. This is our chance to reindustrialise, to rebuild sovereign capability, and to create thousands of high-value, secure jobs.
But we cannot do this if energy costs continue to cripple our most strategic industries.
Gas exports have delivered windfall profits to a handful of multinational companies. Meanwhile, they have hollowed out Australian manufacturing and burdened households and businesses with decade-long cost increases. The system has failed its people.
It is time to stop pretending that we can have it both ways. We cannot be an energy export powerhouse and a world-class manufacturing nation unless we prioritise domestic supply and stability. The gas industry has had its decade. Now it’s time to re-centre energy policy on national interest, not corporate gain.
The manufacturing sector is ready. We are ready to invest, to hire, to innovate. But we need a level playing field. We need energy policy that supports industry, not undermines it.
The recent research from The Australia Institute makes the case plainly. Now the onus is on our leaders, at both the federal and state levels, to act.
