The SMH says the possibility of a standoff between Mr Turnbull and Premier Gladys Berejiklian over the issue of gas exploration in NSW looks likely to further raise the political temperature.
Two reports last week warned of a shortage of gas in 2018 of up to 107 petajoules - about three times larger than previously forecast.
According to the SMH, last week the Prime Minister met with the three major gas-producing companies to ask them to increase supply to the domestic market – or risk facing measures to stop them exporting so much.
The prime minister has continued to heap pressure on the states - particularly Victoria and NSW - to lift bans on onshore gas developments to ensure long-term supply and lower prices.
However, according to the paper, Ms Berejiklian said her government wasn't about to change state policy. There are clearly defined areas where gas mining can, and cannot, occur, she said.
The Turnbull government has flagged it could use the GST carve-up to try to force states to end bans on gas exploration and development.
The SMH explains that in blunt terms it could mean step up CSG production or risk taking a smaller slice of the GST pie. The paper points out that although not expected to apply before 2020, such measures could leave the NSW government between a rock and a very hard place.
