March 6, 2026
Labor faces increasing pressure from crossbench MPs, trade unions, and energy experts to introduce a tax on windfall profits from gas exports. The goal is to protect Australian households from potential energy price surges triggered by the ongoing conflict in Iran.
Global Gas Prices Surge
In the week following the US attack on Iran, gas prices in Europe and Asia have climbed approximately 50 percent. Analysts warn that extended conflict could lead to price increases surpassing those during Russia’s 2022 invasion of Ukraine.
During that earlier crisis, Australia’s domestic gas prices tripled, resulting in double-digit rises in electricity bills. Higher costs also fueled inflation through elevated expenses in refrigeration and food production. Manufacturing facilities, reliant on gas for kilns, furnaces, and as feedstock for plastics, chemicals, and fertilizers, faced severe challenges.
Meanwhile, gas export revenues doubled from $50 billion in 2021 to $90 billion in 2022, drawing criticism over war-driven profits.
Minister Addresses Market Risks
Resources Minister Madeleine King stated that Australia’s gas market is now better protected against price shocks than in 2022, thanks to stricter rules requiring exporters to prioritize domestic supply. However, she acknowledged potential ripple effects.
“We really have to keep a watchful eye on that,” King said on ABC radio.
Recent Disruptions Boost Exports
An Iranian drone strike prompted Qatar to halt operations at a facility representing one-fifth of global LNG exports. This drove spot LNG cargoes to Asia—Australia’s primary market—to record highs, with some selling for over double last week’s prices, reaching $US25 ($35) per million British thermal units.
ASX-listed giants Woodside Energy and Santos stand to gain substantially. Global price volatility could also raise costs for Australian buyers, as LNG fluctuations impact local contracts.
Push for Windfall Taxes
Independent MP Allegra Spender advocates for a windfall profits tax. Independent Senator David Pocock calls for a parliamentary inquiry into gas company taxation, supporting the ACTU’s proposal for a 25 percent export tax.
“The supernormal profits made by a few companies during this time is not a reward for effort or ingenuity or a driver of investment, it is the windfall from war,” Spender said. “These are Australian resources, and the Australian public deserve to share in these gains from war-driven price spikes.”
Domestic wholesale gas prices remain stable below $10 per gigajoule so far.
Expert Recommendations
Grattan Institute senior fellow Tony Wood opposes taxing windfall export profits if the domestic market stays protected. He proposes a levy taxing companies 100 percent on domestic sales exceeding the long-term wholesale contract price of $14 per gigajoule.
“We could easily see a repeat of what happened in 2022. I’m not forecasting that but I am saying it would be very prudent for the government to put in place a protection [for] electricity consumers,” Wood said.
“No one’s going to charge more for the gas if they have to pay 100 per cent tax on the extra revenue. I reckon that’s a fair deal because the producers would still get the money they would have got anyway, and they will get a windfall profit out of their exports, but Australian consumers should not be penalised.”
Opposition from Government and Industry
Minister King warned that new levies could hinder investment in gas projects and exploration. “Imposing new costs on the gas industry would freeze gas production in this country, and a tax on gas exports – as has been proposed by those opposite in the last election – would discourage investment in the new supply we need to back up our transition to net zero.”
The gas industry emphasizes Australia’s role in regional energy security. Australian Energy Producers chief executive Samantha McCulloch stated, “This is a recipe for gas shortfalls, higher energy prices, and the closure of Australian industries that rely on reliable and affordable gas.”
