A NSW upper house inquiry into gas supply has found that the controversial practice of coal seam gas extraction is not the answer to rising gas prices.

The state is facing a major surge in the price of gas from the middle of next year that is likely to dwarf even the $180 rise to the average consumer's bill this year.

The report showed that the benefits of coal seam gas were marginal compared to the environmental risks it entailed. Credit:Glenn Hunt

Rising prices will be driven by the completion of an export terminal for gas in Queensland that means Australian consumers will, for the first time, need to vie with those in Asia for supply. Asian consumers currently pay up to five times more for gas.

But an upper house select committee report has found that the government's preferred answer to rising prices, increasing coal seam gas exploration, will do little to overcome the problem.