The Australian Government has accepted that gas exports are causing supply shortages and raising energy prices for Australians, and that the only way to reduce gas prices is to limit exports. Australia’s gas policy presents three problems:

• high domestic prices
• little revenue raised from sale of resources
• bad climate policy.

This paper proposes that all three problems would be solved by a direct tax on gas exports. This would reduce prices, raise $17 billion per year and provide a disincentive for fossil gas use. 

Rather than a tax on all gas exports, the Government is reported to be weighing two policy options that would favour rival gas companies, and that may or may not be effective in reducing gas prices for some users. This paper examines these two options and addresses the political implications.

1. Option 1: focus on exporters
2. Option 2: market-wide focus on all gas producers.