Anthony Albanese said the government will look at every available option to keep a lid on rising gas prices, but a failure of energy policy and global pressures are making the task harder.
The prime minister said Labor argued for a domestic gas reserve which was ignored by the former government.
"The consequential, significant hike in global prices are beyond people's control but what was in the government's control is actually having an energy policy," he told ABC Radio Perth on Friday.
"We had a lot of rhetoric from the former government about a gas-fired recovery year after year after year and no real policy changes were put in place."
Mr Albanese said his government is engaging with the sector to see how it can alleviate pressure in the short term.
He said government ministers have engaged Woodside in discussions about supplying LNG to Australia's east coast.
Woodside has undertaken a $63 billion merger with BHP Petroleum, doubling its production and granting it a 50 per cent stake in the Bass Strait oil and pipeline gas which supplies natural gas to Tasmania.
The company is also planning on increasing gas supplies through a new import deal with Viva Energy.
"(Resources Minister) Madeline King herself has been in contact with the big providers as well as Chris Bowen, the energy minister, was talking through with the sector (about) how we can alleviate the immediate real pressure on businesses and households," Mr Albanese said.
Australians would be able to benefit from the export dollars from Woodside's Scarborough gas project off the West Australian coast despite constrained domestic supply on the east coast, he said.
"We will continue to benefit from the export of our resources, the revenue of which goes in part to fund education and health and other services in our national economy," Mr Albanese said.
"At the same time, Australia will of course change the energy mix we (and) can see that happening right now."
The WA and federal government remain under pressure from the Greens, who are using their record showing at the federal election to push for an embargo on new gas and coal projects.
Mr Albanese said while the cheapest form of new energy is renewables backed up by battery storage, gas will continue to play a role in the domestic energy mix as a "firming fuel".
Further approvals of fossil fuel projects will be considered on their economic impact and A commercial analysis of the projects, Mr Albanese said.
"They'll all be judged on their merits," he said.
Energy ministers to meet next week to discuss crisis
Federal, state and territory ministers will meet next week to discuss the developing energy crisis with burgeoning gas, petrol and electricity prices being described as a perfect storm.
Deputy Prime Minister Richard Marles said the government would consider using whatever mechanism can be used to counter tightening gas supplies across the east coast.
"We'll be meeting with the regulator (and) with our state counterparts in a ministerial meeting next week to look at every available option here," he told the Nine Network.
"The regulators already said that in initiating the gas supply mechanism they're already seeing more gas supply into the southeast corner of the country and that should have a short-term impact."
On Wednesday, the Australian Energy Market Operator triggered the Gas Supply Guarantee Mechanism for the first time since the measure was introduced in 2017 in order to secure gas for power generators and ward off a potential shortfall in southern states.
Deputy Prime Minister Richard Marles says changes to the energy grid will take time. Source: AAP / Con Chronis
"Action is necessary and action is being taken," Energy Minister Chris Bowen told reporters in Canberra on Thursday.
"The situation is serious but it is being managed by our regulators professionally."
The government will work towards increasing renewable energy take-up in the medium to long term, but changes to the energy grid will take time, Mr Marles said.
"What we have got now is really the product of nine years of failure on part of the former government in terms of having consistent energy policy," he said.
"Investment in renewables is down, which is why we don't have a grid that can accept them."
Opposition leader Peter Dutton called the characterisation a complete rewrite of history.
"This government went to the election saying they had the answers and clearly they don't. You look at Chris Bowen now, he is like the bunny in the headlights and he has no idea which way to go," he said.
"This is nothing to do with renewables. I think the government has to take responsibility for what is a serious issue."
Opposition leader Peter Dutton says Richard Marles' characterisation that the Liberal government didn't invest enough in renewables is a complete rewrite of history. Source: AAP / LUKAS COCH
"It seems to me that the inexperience of both Anthony Albanese and Chris Bowen is shining through. They have got the ability and the legislation there to deal with this and they don't know what they should do."
Director of the Monash Energy Institute, Professor Ariel Liebman, says Australian markets are exposed to international supply constraints with retailers shipping a vast amount of gas overseas.
"We have huge amounts of coal seam gas which was allowed to be exported with none reserved for Australia which has ultimately led to a situation where Australians are paying for gas prices at global parity," he said.
"This would all have been preventable if successive governments had paid proper attention to rigorous monitoring and regulation of all the key energy markets in Australia."
Professor Liebman says the government should pull the gas trigger, known as the Australian Domestic Gas Reservation Mechanism, to divert exports and shore up domestic supply.
"The best immediate solution would be to pull the so-called 'gas trigger' to requisition supplies of gas intended for export," he said.
"In addition, the government should also seriously consider a full gas reservation policy for the entire country, similar to the one in Western Australia and the United States."
The government hasn't ruled the action in or out, but Mr Bowen said if used, it could not come into force until 1 January next year.
"It is not a short-term answer. There is a process outlined under law of consultation which would have to occur before it could be implemented; it is a supply trigger, not a price trigger," he said.
