Australia’s Energy Price Crisis: Winners and Losers

Don’t bet on politicians.

That’s been a major rule of mine.

But sometimes, something’s gotta give.

So if it is indeed true that “gas plays a vital role in our energy framework” then we’re going to need some incentives and lots of drill permits.

I’ll keep banging the drum.

And today I’ll lay out exactly how Australia’s energy crisis is impacting both large and small caps alike.

There are plenty of losers.

As well as some potentially unlikely winners that are deeply unloved at the moment.

(Hint: gas developers)

Now, for context, Australia’s electricity prices surged 37.1% in the twelve months to October 2025, marking one of the steepest climbs in a generation.

Granted, that was partly due to the wind back of energy bill handouts.

But the point remains…

Gas prices have moved from $5 per gigajoule just a few years ago to between $12 and $14 today.

And that means for many ASX companies, energy costs are now eating directly into operating margins.

The Losers: Manufacturers

As you’d expect in this landscape, manufacturing is getting harder and harder.

Take this packaging business, for example. Orora (ASX:ORA) with a $2.7B market cap.

They flagged an ~$8 million hit to its FY2024 half-year results from power bill increases alone, with similar impacts expected each half.

That’s ~$16 million annually from electricity costs, representing over ~6% of operating earnings.

That’s a serious amount of money.

The company has invested heavily in efficiency measures, including a $33 million oxygen plant at its Gawler facility and new renewable power agreements covering 100% of its Queensland cans operations.

Yet despite these efforts, energy cost inflation continues to erode margins.

With large energy-intensive glass furnaces and aluminium can plants across Australia, Orora remains trapped in one of the world’s highest industrial energy cost environments.

Small-cap industrial companies in metals processing, construction materials, and fabrication are likely facing even worse.

They lack the balance sheet strength to absorb such dramatic cost increases.

There are other big manufacturers to consider as well.

BlueScope Steel (ASX:BSL), with a ~$13.1B market cap , and Reliance Worldwide (ASX:RWC), with a ~$3.3B market cap, have both flagged energy costs as material headwinds to operations.

When your energy bill jumps ~75% and you’re competing against subsidised imports, the math stops working quickly.

The data centres are facing similar pressures.

AI infrastructure follows cheap electricity like a bloodhound.

Even Australia’s mining giants aren’t immune.

BHP Group (ASX:BHP), Rio Tinto (ASX:RIO), and Fortescue (ASX:FMG) all face expanding energy costs in their operating expenditure.

BHP’s WAIO iron ore operations are targeting unit costs below US$17.50 per tonne, but energy inflation is one of the key pressures working against that target.

Fortescue’s C1 costs of US$17.99 per wet metric tonne remain industry-leading, but the company has flagged energy as a cost factor requiring continued management.

And for smaller mining operations without the scale advantages, I have little doubt that rising energy costs are pushing some projects into uneconomic territory.

The Retail and Consumer Squeeze

Retailers and consumer-facing businesses are also facing pain.

Extended trading hours mean lights, heating, and refrigeration running for longer. Small-cap retail chains lack the negotiating power that a Woolworths or Wesfarmers commands with energy retailers.

For small-cap companies that make things or need brick-and-mortar shops operating on thin margins, that translates directly to compressed profitability or higher prices passed to increasingly squeezed consumers.

Watchlist: 6 ASX
Small Cap Gas Companies

Here’s where it gets interesting.

Energy-intensive operations, such as processing and refining, are becoming economically unviable in Australia.

But the same energy crisis creating this problem is also creating an opportunity for those on the supply side.

If Australia’s policymakers actually get off their butts and follow through on their election promises, domestic gas developers become the most obvious beneficiaries.

There are several small-cap gas developers who could benefit if policy settings shift.

You may have seen some of these names before, if you read regularly.

Strike Energy (ASX:STX) – ~$396M market cap, developing gas projects across Western Australia.

Elixir Energy (ASX:EXR) – ~$132M market cap, focused on east coast gas supply with a 3 trillion cubic feet (Tcf) equivalent contingent resource in the Taroom Trough, Queensland.

Comet Ridge (ASX:COI) – ~$162M market cap, is focused on developing natural gas resources for the supply-constrained east coast market.

Its flagship Mahalo Gas Hub in Queensland contains 676 petajoules of gross 2P reserves and 2C contingent resources, located near the Gladstone LNG export precinct. The company has already executed its first Gas Sales Agreement with CleanCo Queensland.

3D Energi (ASX:TDO) – ~$83M market cap, recently confirmed gas-bearing intervals in the offshore Otway Basin, with moveable gas identified in multiple reservoirs.

Tamboran Resources (ASX:TBN) – ~$800M market cap, is developing unconventional gas resources in the Northern Territory’s Beetaloo Basin.

Emperor Energy (ASX:EMP) – ~$91M market cap, holds material gas exploration and production acreage in South Australia and offshore, with drilling campaigns planned across multiple prospects.

So there they are.

The solution sits right beneath our feet.

At the same time, don’t hold your breath.

These kinds of companies can sit effectively idle for years at a time, and that’s a major risk when betting on politicians.

The question is whether policymakers will actually execute on their promises to fix this.

For some small-cap ASX companies, that execution may determine who survives and who doesn’t.