The ACCC says Australia's domestic gas supplies are growing, but prices are still too high.

The Australian Competition and Consumer Commission (ACCC) has issued a new report on the nation's gas market after earlier warning that the east coast of Australia could face a gas shortfall in the first half of 2018, if producers do not boost supply.

After the Federal Government threatened to impose export restrictions on producers to make sure Australian consumers were prioritised, gas companies agreed to boost supply.

ACCC chairman Rod Sims said the supply shortage had “a catastrophic effect on the Australian economy”.

“It's meant that gas prices have gone up a lot — doubled, tripled, quadrupled for some businesses and some consumers,” he told the ABC.

“And it meant that some companies just could not get gas, there just wasn't enough gas.”

The deal struck between the Federal Government and gas producers is having an effect, Mr Sims said, but prices are still above ideal levels.

“What we've seen is LNG producers have reduced exports to provide more gas to the domestic market, and that has overcome the shortfall, and that has seen prices for many companies fall from around $16 [per gigajoule] to around $8 to $12,” Mr Sims said.

“So we no longer have a shortfall and prices have come off somewhat.

“It's certainly a better picture, the market still has some problems, but it's a much better picture now than we had a couple of months ago.”

The Australian Industry Group's Tennant Reed says he is not celebrating yet, as businesses still face high gas costs.

“Rather than getting absolutely hammered on their next contract, they will instead be pained, or at best peeved,” he told reporters.

The ACCC report says southern states still rely on Queensland gas production to meet demand.

Federal energy minister Josh Frydenberg says the opposition to gas exploration is part of the problem.

“We are encouraging the states to undertake geological surveys of the resources that they have, and to provide more incentives to the landowners and to the farmers to develop these gas fields,” he said.

“The experience overseas, particularly in the United States, is if the landowners can get more of a reward for the development of gas on their land, then they will do it, and you will overcome some of the objections that we've seen to date.”

Mr Frydenberg said the Government intends to keep the gas supply deal with producers in place for now.