Explosives manufacturer Orica, one of the nation’s largest gas users, says Australia’s east coast gas market has failed consumers as demand outstrips supplies and prices blow out to levels at which gas-reliant businesses can no longer cope.

Steep increases in the price of uncontracted gas to more than $20 a gigajoule are threatening to deepen cost-of-living pressures for households that use gas for cooking and heating, and heightening concerns for companies such as Orica, which depend on it for energy or as the essential input in ammonia for making fertiliser and explosives.

“Gas is critical, not just as a source of energy but as a raw material,” Orica chief executive Sanjeev Gandhi said. “Out of natural gas we produce very critical products and services for the mining industry in Australia, so it’s absolutely essential that manufacturing in Australia is supported so that we are able to continue to serve the economy.”

The Albanese government is debating a range of potential interventions in the gas market to tame runaway energy costs, such as introducing price caps on local gas sales and stronger limits on how much gas can be shipped as liquefied natural gas (LNG) overseas.

While gas producers are pushing back against the looming threat of intervention by warning it could imperil investments in future sources of supply, Gandhi on Wednesday commended the federal government’s efforts to find a solution to soaring prices, including considering new pricing mechanisms. Although Orica was not presently in the market for more gas supplies, he said, spot prices of between $25 and $35 a gigajoule were unaffordable and must be urgently addressed.

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“No industry likes to have government intervening, and you want to leave it to market mechanisms to decide on supply and pricing, but obviously market mechanisms in Australia have not worked,” he said.

“I’m really glad that the government is engaging with consumers like Orica and with the gas suppliers ... and I’m looking forward with a lot of interest and hope that there might be a solution coming up.”

Soaring energy costs, exacerbated by Russia’s invasion of Ukraine, is one of the latest economic challenges to face Melbourne-based Orica, a major supplier of commercial explosives and blasting systems to the mining, energy and construction industries.