The Australian Energy Regulator (AER) has today released its inaugural report into the competition and efficiency in wholesale gas markets.
The Wholesale gas performance report 2026 provides an assessment of how aspects of the east coast wholesale gas markets are performing under their current structure, including short‑term gas markets facilitated by the Australian Energy Market Operator (AEMO), pipeline transportation and storage.
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AER Board Member Jarrod Ball said the new report provided transparency on how short‑term facilitated gas markets are functioning as these markets play an important role in ensuring gas is delivered efficiently across the east coast.
“Overall, our report shows that short-term markets are functioning broadly as intended in the role that they are designed to play,” Ball says.
“Short-term gas markets have grown significantly since their inception to be competitive and efficient. Pricing levels, which are generally below the cost of long-term contracts, indicate that the markets are helping to get additional gas to those users who need it.”
Short-term wholesale markets are not the primary driver of the prices households pay. Retail prices are more influenced by long-term supply, contracts, and transportation costs.
“Wholesale spot markets help to keep gas flowing efficiently across the system, particularly during peaks, including trade over critical winter months,” Ball says.
“But the prices customers ultimately pay are largely shaped by longer-term supply, production costs, and contract arrangements.”
The report notes that east coast gas markets are operating under tightening supply conditions and rising production costs, which have been putting upward pressure on prices over time. It also notes that access to transportation and storage is critical, with key pipelines heavily contracted and ownership concentrated.
“These broader structural factors sit outside short-term trading markets but are central to understanding price pressures and reliability over the longer term,” Ball says.
The AER continues to monitor international developments, including events in the Middle East, and any potential impacts on Australian gas markets particularly over critical winter months as demand increases.
While global LNG supply has tightened, domestic prices have remained steady as of late April 2026, with no evidence of increased purchasing by LNG exporters in short-term markets.
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From July 1, 2027, the Australian government will introduce a domestic gas reservation scheme to preserve Australia’s energy security, requiring gas exporters to supply 20 per cent of their exports to the national market.
