When it comes to energy security, planning ahead is everything. For businesses and households on Australia's east coast, understanding the gas supply outlook is important for budgeting and operational stability. The Australian Competition and Consumer Commission (ACCC) has just released its latest gas inquiry report, shedding light on what we can expect in the second quarter of 2026.
While the overall supply across the east coast is predicted to be sufficient, the picture is more nuanced when we look state by state. The southern states Victoria, New South Wales, South Australia, Tasmania, and the ACT face a unique challenge. The ACCC projects they will rely heavily on surplus gas from Queensland and storage reserves to bridge a widening gap between local supply and demand.
This tight supply forecast highlights the delicate balance of our energy grid. As legacy gas fields reduce production and demand for gas-powered electricity generation rises, the need for efficient transport and strategic storage becomes more important than ever. In this article, we’ll break down the numbers, explore the reasons behind the supply shift, and discuss what this means for prices and contracts moving forward.
The latest data paints a picture of a market in transition. While the east coast market as a whole is not facing an immediate crisis, the regional disparities are significant. Gas producers forecast a range between a 15 petajoule (PJ) surplus and an 8 PJ shortfall for the entire east coast market in Q2 2026. One key variable is how much uncontracted gas Queensland LNG producers choose to export versus supply to the domestic market. - ACCC
The story of 2026 is really a tale of two regions. Queensland is anticipated to have more than enough gas to meet its own local needs. In contrast, the southern states are facing a deficit. Projections indicate that the southern states will need an additional 26 PJ of gas throughout the quarter to keep the lights on and businesses running.
ACCC Commissioner Anna Brakey highlighted this growing divide, noting that the gap between demand and local supply in the south has widened in recent years. This is driven by two main factors:
To fill this gap, the southern states will need to import surplus gas from Queensland. This highlights the critical importance of pipeline infrastructure and the ability to transport energy efficiently from the north to the south.
Storage facilities play a pivotal role in balancing the grid. The Iona gas storage facility in Victoria is a key asset for winter preparedness. As of late December, estimates suggest that Iona will require about 12 PJ of gas injections before May 2026. This replenishment is vital to ensure there is enough buffer to handle the high-demand winter period that follows Q2.
For commercial and industrial users, supply is only half the equation—cost is the other. The good news is that recent prices have stabilised within expected ranges. Contracted gas prices have been hovering steadily around $13–15 per gigajoule (GJ). This is a relief compared to the volatile highs seen during the 2022–23 period.
These figures suggest that the market is functioning within the expectations of LNG netback prices and domestic supply conditions. However, "stable" does not always mean "affordable" for everyone.
Despite the stabilisation, many businesses are feeling the pinch. Commercial and industrial users have reported to the ACCC that current price levels continue to challenge their viability. Energy costs are a significant input for manufacturing and processing industries, and sustained prices above historical averages can impact profitability and competitiveness.
Furthermore, the structure of contracts is shifting. There has been a marked increase in gas being contracted on a short-term basis. The volume of gas sold under short-term contracts increased by 78 per cent to 57 PJ in the first half of 2025 compared to the previous year.
While short-term contracts offer flexibility, they lack the cost predictability and supply certainty of long-term agreements. For a business trying to plan five or ten years into the future, relying on short-term fixes can be risky. The ACCC has noted concerns from users about the difficulty in securing long-term supply, which complicates long-term investment decisions.
To ensure the market remains fair and transparent, the ACCC continues to monitor behaviour and review pricing methodologies.
The ACCC has commenced a review of how it calculates LNG netback prices. This metric is essentially the export parity price—what a gas producer could expect to receive if they exported the gas instead of selling it domestically. It serves as an important benchmark for local buyers. The review aims to ensure this price series remains an accurate resource for market participants. Submissions from stakeholders are open until 6 February 2026.
Following a review that found some retailer selling practices wanting, the ACCC has developed draft voluntary best practice guidance. This guidance is designed to improve transparency and fairness in how retailers sell gas to commercial and industrial customers. The draft is open for comment until 27 February 2026.
An independent report released alongside the ACCC inquiry provides insight into the long-run costs of producing gas. A key observation is that without new sources of supply, production costs are expected to rise. As lower-cost reserves are depleted, producers must tap into more expensive fields, which ultimately influences the price consumers pay.
The forecast for Q2 2026 serves as a reminder of the complexities within Australia's energy market. While there is enough gas to go around, getting it to where it is needed at a price that businesses can sustain remains a challenge.
For businesses, staying informed is the ideal defence against volatility. Understanding these trends allows for better risk management and strategic planning. Whether you are a large industrial user or a small business owner, keeping an eye on these regulatory updates and supply forecasts can help you make smarter energy choices.
If you are looking to understand how these market shifts might impact your broader business costs, or if you are exploring digital solutions to streamline your operations, it might be worth looking into how technology can help. For example, white label price comparison software can empower businesses to offer value to their own customers, while understanding white label SaaS platforms can drive efficiency.
As the energy market evolves, so too should our strategies for managing it.