Here's Jim Kingsdale with another angle. From Energy Investment Strategies:
The price of natural gas in the U.S. has about doubled in a bit less than a year despite the fact that U.S. production has actually increased about 5% due in part to new horizontal drilling techniques being applied to recently developed vast “unconventional” gas fields in the U.S. and Canada like Haynesville. So it might seem like the price of gas has gotten ahead of fundamentals. But there are good reasons to be bullish about gas prices longer term.
Natural gas is inherently cheap on two scores. One is that the BTU equivalency of gas to oil would price gas around $23 per Mcf, nearly double its current price. Also, gas is the cleanest burning fossil fuel so it should be advantaged if and when carbon taxes are passed to deal with climate change.
Gas is a regional market and supplies in Europe and Japan are tighter than in the U.S. Thus prices are higher there, allowing them to outbid U.S. LNG terminals for imports which has virtually eliminated LNG supply coming to North America. Moreover, European and Asian gas supply prospects may be even tighter after 2009, as discussed here which would continue to preclude LNG supplies to the U.S. market absent much higher prices. ...MORE