Federal Resources Minister Matt Canavan says gas producers must ensure domestic supplies and Victoria's blanket ban on gas projects makes no sense.
Senator Canavan says a gas reserve is unnecessary because there are ample supplies of coal, even though 90 per cent of coal is exported and there is no coal reserve.
"Nonetheless, the government will have to consider other options if things do not improve. The best response would be for the commercial modas (modas) of gas suppliers to ensure that domestic gas is provided. The ball is in the industry's court," he told the Australian Domestic Gas Outlook Conference in Sydney on Wednesday.
Senator Canavan also criticised Victoria's blanket moratorium on onshore gas exploration and development, put in place last week.
He said he completely understood the environmental concerns, but urged all sides of politics to at least keep a pathway open.
"I cannot understand and can see no sense in a state banning a practice of gas extraction that has been safely used for 100 years in this country, that would put at risk Victoria's traditional access to cheap and affordable power and the consequent strength that its manufacturing sector has," he said.
Senator Canavan said current high domestic prices should also be sparking a supply response from the market, but were not.
That was because a large proportion of domestic prices was due to high transportation costs, he said.
"If we can reduce the cost of that transport we can bring down prices and that is why government is progressing reforms on pipeline markets through the Burdekin review."
