Compare these statements concerning oil and natural gas made a decade apart:

Oil in 1998-99:

[I]f you're still operating under the assumption that the earth's petroleum--or at least the cheap stuff--is about to run out, you're not going to thrive in the new oil era. Technology is making it possible to find, produce, and refine oil so efficiently that its supply, at least for practical purposes, is basically unlimited.
            --BusinessWeek, December 14, 1998

With oil prices projected to stay low, companies are dismissing employees and cutting the spending that is crucial to finding the oil they will sell in the future.
            --The New York Times, December 26, 1998

Now, as oil prices languish at the lowest levels in more than a decade, contractors like Diamond, the R & B Falcon Corporation, the Noble Drilling Corporation and the Rowan Companies are taking rigs out of service as rents slide.
            --The New York Times, January 2, 1999

[T]he situation looks so gloomy that Crown Prince Abdullah of Saudi Arabia warned starkly in December, ''The boom days are over, and they will not come back.''
            --The New York Times, January 16, 1999

Baker Hughes Inc., the third largest United States oilfield services company, said the number of rigs drilling for oil and natural gas in the United States had fallen to the lowest level since 1947.
            --The New York Times, January 26, 1999

Yet here is a thought: $10 [a barrel] might actually be too optimistic. We may be heading for $5.
            --The Economist, March 4, 1999

Natural Gas in 2008-09:

U.S. natural gas reserves are far more plentiful than previously estimated, says an industry study being released today - a discovery that heralds a potential remedy to the energy crisis. The report says the U.S. has up to 50% more natural gas reserves than earlier projections because of higher-than-expected yields from 22 shale formations in 20 states.
            --USA Today, July 30, 2008

Given the current gas supply/demand situation, [John Walker, the chief executive officer of EV Energy Partners] sees gas prices falling into the $3-$4 per Mcf range that will create serious economic challenges in the gas and energy industries. He thinks gas storage will be full by September 1st and that could lead to $1 per Mcf gas as gas-on-gas price competition develops.
            --Rigzone, January 21, 2009

The number of rigs drilling for natural gas in the United States fell 15 to 685 this week, the first time below the 700 benchmark since late November 2002, according to a report on Friday by oil services firm Baker Hughes in Houston.
            --Reuters, June 12, 2009

Years of worry about supply shortages because of the maturing of conventional supplies have been replaced by worries there aren't enough customers for the 1,200 trillion cubic feet of natural gas in shale deposits -- enough to last a century -- found in the past three years, plus liquefied natural gas coming from offshore that is "needed like a hole in the head," Mr. [Steve] Letwin [vice-president, gas transportation and international, at Canadian pipeline giant Enbridge Inc.] said in an interview.
            --Financial Post, June 15, 2009

The amount of natural gas available for production in the United States has soared 58% in the past four years, driven by a drilling boom and the discovery of huge new gas fields in Texas, Louisiana and Pennsylvania, a new study says. The report, due to be released Thursday by the nonprofit Potential Gas Committee, concludes the U.S. has more than 2,000 trillion cubic feet of natural gas still in the ground, or nearly a century's worth of production at current rates.
            --Rigzone, June 17, 2009

BP Plc, Europe's second-largest oil company, forecasts that [world] gas resources may rise 60 percent to 100 years of global use at current rates, helped by unconventional sources that are undeveloped or unidentified.
            --Houston Chronicle, October 9, 2009

A new technique that tapped previously inaccessible supplies of natural gas in the United States is spreading to the rest of the world, raising hopes of a huge expansion in global reserves of the cleanest fossil fuel.
            --The New York Times, October 9, 2009

Big players in the LNG market like Repsol YPF, Total and Qatargas, which oversees some of Qatar's huge LNG industry, predicted this week spot gas prices will remain mired near current low levels until well into the next decade.
            --Reuters, October 10, 2009

At turning points most market observers and participants are of the same mind. That doesn't mean the bear market in natural gas can't continue, perhaps for quite a while yet. But the idea that gas will remain cheap and plentiful for decades because of technological breakthroughs sounds too good to be true, and it probably is. Dave Cohen offers a corrective to this vision in his piece, "A Shale Gas Boom?"

Of the many problems not apparent in the above quotations concerning natural gas, two loom large. The shale gas resource is undoubtedly vast. But the key question is at what rate can we produce this shale gas. I've used the following analogy many times before, but it bears repeating: If you inherit a million dollars with the stipulation that you can only withdraw $500 a month, you may be a millionaire, but you will never live like one. We may all be natural gas moguls, but will we ever live like natural gas moguls?

The second big question is how much energy will be required to get the shale gas. The financial costs of getting it are one indication. A key industry insider who heads the country's largest independent shale gas driller said last year that a sustained natural gas price above $6 per mcf is required to grow gas supplies. In truth, a price above $10 per mcf might be needed to get the massive quantities of shale gas touted by the industry. The industry is now drilling the sweet spots in the various shale formations. As they explore further, it will become harder to extract the remaining gas. That means more energy will be required per unit of gas. At some point, shale gas will cease to be worth extracting meaning much of the resource will remain in the ground.

Perhaps the technology will improve. But will it improve quickly enough to offset the increasing difficulty of extracting the shale gas resource as the more easily exploited areas deplete?

There are myriad other issues as well with both conventional and unconventional natural gas:

• High depletion rates, as much as 65 percent for shale gas wells within the first year, and 30 percent per year on average for all North American gas wells.
• Pollution of drinking water aquifers from chemicals dissolved in the water used to fracture shale gas formations, a process that is necessary to allow the gas to escape.
• The availability of capital in a depressed economy and industry to pay for expanded exploration and drilling for both conventional and unconventional gas.
• The availability of rigs and other equipment needed for a geometrically increasing drilling rate for shale gas necessary both to maintain existing production (in the face of the rapid depletion of wells) and to grow supplies.
• The possibility that conventional natural gas production in North America may be nearing a cliff that unconventional supplies simply won't be able to compensate for.

We heard the same kind of optimism about supplies (and pessimism about prices) just before oil began its historic ascent from $10 a barrel to $147. Given what we know about consensus predictions for fossil fuel prices and supplies, would it be wise to accept the current consensus on natural gas?