Research by ACIL Allen Consulting for industry body Gas Energy Australia found gas supports almost a quarter of a million jobs, underpins 3.4 per cent of GDP, and is forecast to grow next year.
The contribution to the local economy is greatest in the Northern Territory (15.53 per cent), followed by Western Australia (8.76 per cent) and Queensland (5.94 per cent).
Gas produced in Australia is mainly exported as liquefied natural gas (LNG), causing anger for LNG-dependent domestic manufacturers as the supply shock and rising prices threaten to put them out of business.
The gas share of primary energy production has almost doubled over the past decade to over 30 per cent in 2020/21, mainly from new coal seam gas-based LNG in Queensland and more LNG production in WA.
The report released on Tuesday estimated that gas at the well head was worth over $12 billion in 2020/21 and total production taxes paid were around $1.1 billion.
Production of liquefied petroleum gas (LPG) was nearly $2 billion in 2020/21 with household demand, including barbecues, accounting for almost half (45 per cent).
Over the past decade, gas demand in Australia increased at an annual average growth rate of 2 per cent and by 9.33 per cent in mining with the sector a significant consumer in WA, Queensland and the NT.
The residential sector was the main consumer of gas in Victoria while electricity generation was the main user of gas in WA.
Gas is used to heat homes, fire up restaurant kitchens, for industrial-strength heat for furnaces and refineries, and to power generators in remote sites and across the national electricity grid.
"A future made in Australia will be built on gas," Gas Energy Australia CEO Brett Heffernan said.
Many everyday items also rely on gas, including plastics, cleaning products and detergents, agricultural chemicals, explosives, pharmaceuticals and some textiles as well as food processing.
But around 80 per cent of Australian LNG is sold via lucrative long-term export contracts
The sector is "on the nose" and must justify steep domestic prices, according to Resources Minister Madeleine King.
The Albanese government has so far resisted calls for an new tax on extraordinary gas profits to pay for relief to consumers.
Energy expert Frank Jotzo says a windfall tax on gas producers makes more sense than a price cap.
"A mandated price cap or pushing prices down through a gas reservation policy might seem like the obvious fix," Professor Jotzo said.
"But it would destroy incentives to save gas and switch to alternatives," he said.
In the latest global forecast, International Energy Agency acknowledged "both systems" are required to function well during energy transitions to meet the needs of consumers.
The industry says LNG, LPG, compressed natural gas and liquid hydrogen have lower emissions than petrol, diesel, and coal-fired electricity.
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