Australia's gas exporters have been under the microscope since June 6 when the Treasurer asked the ACCC "to ensure the factors influencing prices in gas markets (domestic and export) are made fully transparent and to bring to the government's attention any need for regulatory change to ensure electricity and gas markets function properly for the benefit of all Australians".

Dr Chalmers asked the commission to investigate the sector following a surge in energy prices and fears of extended power outages in April, May and June. The Prime Minister, among others, suggested some energy producers had "gamed the system", reducing output to maximise profits.

The commission's interim report, released over the weekend, is genuinely alarming. It has warned of a major shortfall in the amount of gas slated to be sold into the domestic market in 2023 and says, if this is not addressed, many industries dependent on gas could be forced to close.

"In June 2022, Advance Bricks announced it was closing its manufacturing operations employing over 20 people due to gas price rises and Australian Textile company Flickers is also reported to be facing closure," the report states. "Commercial and industrial users have expressed great concern about the impact of recent price rises, if they continue."

If the anticipated shortfall did come to pass south eastern Australia, which has the highest demand for gas for commercial and industrial users, and for domestic purposes, would be the hardest hit.

"The effects ... are concentrated in the southern states (NSW, Victoria, South Australia, Tasmania and the Australian Capital Territory) where gas resources have been diminishing for some time and where the majority of C&I users are located, with a 54 PJ shortfall is forecast."

The heart of the problem is that, with international LNG prices heading north at a record rate, local exporters are keen to make hay while the sun shines. It has been claimed this had led to an unwillingness to negotiate in good faith with local gas distributors and commercial and industrial users, and also resulted in price gouging.

"We are very concerned at reports of even higher prices being offered to commercial and industrial users in April and May 2022, with reports of gas price offers as high as $21.20 a gigajoule," the report says.

"We are also concerned with the extremely high prices observed in domestic spot markets since May 2022 along with high LNG prices, which may flow through to long term contract prices."

It is understood the break-even price for most local LNG producers and exporters is around $5 a gigajoule.

In a separate report last week, the Australian Energy Market Operator noted that, on June 30, the east coast gas price had peaked at $41 a gigajoule, up from an average of $10 a gigajoule in the first quarter.

While the gas industry is downplaying the ACCC's warning of shortages, saying "there is no gas shortfall and no shortfall coming", the Albanese government, with its new found appreciation of just how important LNG is when it comes to keeping the lights on, can't afford to take any chances.

Unless the industry can provide compelling evidence it will be able to meet the needs of the domestic market in an equitable fashion in 2023, it may find itself on a much shorter leash.