States want it, manufacturers want it, but the Federal Government seems unlikely to set up a domestic gas reservation policy anytime soon.

A soon-to-be-released green paper on Australia's energy supplies will cover a range of industry priorities and future policies, but insiders say the gas reservation idea will miss out again.

Federal Industry Minister Ian Macfarlane says that putting aside gas to keep domestic prices down would go against the Government’s free market principles.

The West Australian State Government has reserved gas for local, but Mr McFarlane says it did not work.

“In WA, if you ask anyone, they'll tell you it's corrupted the market and affected supply,” he told the ABC.

“There is no good reason for a reservation policy... it is ideological claptrap.”

The Australian Manufacturers Association (AMA) CEO Ben Eade sees no hint of claptrap.

He says it is necessary to assure the supply for domestic users, and the idea that quarantining gas will kill off investment is not valid.

“I guess Canberra may swallow the spin that reservation would destroy investment. But reservation hasn't killed investment in WA," he said in response.

“Last year was a record year for investment in LNG and there's about $116 billion in projects under construction,” he said.

But the actual price paid for domestic users is contentious.

Reports say that the domestic price is around the same as the export price, but when production peaks, it may spike threefold.