Peter, having convinced myself that shale gas is cheap to find, although you could argue that the jury is still out on the Haynesville and Marcellus, and that all of the Barnett will not produce the same results as the core, I saw a projection from a reputable group that sees shale only making up less than 30% of production in nine years. Where will the remaining 70% come from and what will it cost? It could be that the marginal cost of supply is still much higher. This projection only had the Marcellus producing at less than 2 bcf/day. The conventional wisdom is that if you are not in the shale plays, you won't be in a winner in the industry, and it appears that may be the answer.

There are some that see the US rebuilding its industrial sector, as you mentioned, or the transportation sector could soak up a bunch of supply. I still think I'm in the camp that oil will only get more expensive to find, however, the Bakken play that GH mentioned is adding reserves at $10 a barrel, but you are only talking about a few billion barrels. It's not inconceivable to solve the ratio with lower oil prices. Assume non shale gas f and d costs get you to $6, instead of $5, for the next few years, at 7.5 to 10 ratio range, you have oil in the $45 to $60 range. You can argue that oil is global and gas is domestic but that may be changing with LNG and the talk of shale plays around the world.

Having said all that, I'm not sure the industry has accepted lower prices or that investors are factoring in a lower price deck. It's still $7 or more for the near term and it's full speed ahead, at least for the independents as the majors are not spending money domestically, and all the money will be spent on big wells, which in turn doesn't require as many rigs, so the old relationship to the rig count may have been altered. It will be interesting to see how it plays out and hopefully make some money in the process. CHK is only 20% hedged for next year and they are still adding acreage and spending all the cash they can generate, for a co that already has 14 million acres.