If you believe proponents of the gas shortage argument, the problem is being caused by most of WA’s gas being exported as LNG to Asia.

If you believe the gas companies, that’s not so. They are providing exactly the amount agreed with the Government of WA.

What no one seems to be talking about, yet, is the price of gas – a subject Slugcatcher thinks ought to be aired so that everyone understands what’s really wrong.

In rough terms, gas sold as LNG fetches a price which is about double (and perhaps triple) the price of gas sold in WA.

Why is this so?

The answer lies in the messy birth of WA’s northwest gas industry. Back in the 1970s, then Premier Sir Charles Court demanded that the gas developers provide adequate gas for the south of the state.

In fact, what happened is that so much gas was set aside that there was a glut of the stuff, threatening the domestic coal industry because it was sold so cheaply.

DomGas, as it became known, was an expensive nuisance for the producers (led by Woodside), and a pain for the coal industry.

Roll forward a decade or so and the legacy of that original deal continues, exacerbated by the failed sale of the Dampier-Bunbury natural gas pipeline or, to be more correct, exacerbated by the failure of government to agree to higher gas transport fees, which would have encouraged expansion of the pipeline as well as the production of more gas for domestic sale.

This is, obviously, a messy situation created by gas producers and government striving for different objectives.

Gas producers want to maximise profit.

Government wants to maximise investment in downstream minerals processing and manufacturing using the state’s abundant supply of gas – and is being urged on by a collection of energy-intensive processing industries.

What’s missing is an agreement on the price of gas – and this is really where the two sides are a country mile apart.

Adding to this already complex equation is a demand from the WA Government that gas companies “reserve” a portion of their gas for sale to domestic consumers.

If the word "subsidy" springs to mind when you read about the gas "reservation" policy, then you’re probably on the same wave length as the senior management at Woodside.

Slugcatcher, not normally a friend of big oil, sympathises.

How, he asks, can a company with its primary duty to shareholders, sell gas to one set of customers at a cheaper price than it can sell to another?

Corporate laws about a director’s duty to shareholders spring to mind when you consider that question.

In many ways, this subsidy/reservation argument is an extension of the way some third-world countries are breaking patent laws by copying drugs which cost pharmaceutical companies billions of dollars to develop but which government wants provided cheaply to its citizens.

And then, layered over the gas supply argument, are the claims of potential domestic gas customers that no gas is available.

Rubbish.

Of course it’s available – just pay the going price and you will be inundated with the stuff.

The real question, which is where we started, is what is the correct price?

The answer is that Australian gas consumers, like their cousins buying fuel for their cars, have to pay a price close to world parity.

No matter what the government might argue, no matter how loudly it harangues the gas producers, the days of gas subsidies are over – and if a project doesn’t stand up on a globally competitive energy-pricing basis in Australia, then let it lapse.