Gas supplies are going up....

Forget peak oil...have a look at the new developments in gas....

In the oil patch, they are calling it the "shale sweepstakes"—a fevered rush to purchase drilling rights to natural gas that lies deep in deposits of shale rock. Output from these fields has been on a rocket ride for the past four years. It is the reason why natural gas production overall in the U.S. is expected to jump 9% in 2008, after nearly a decade of no growth.

This is good news for consumers who'll be turning up their gas furnaces this winter. Natural gas prices have fallen 50%—much steeper than oil—in the past two months, to a recent $7 per 1,000 cubic feet. All the new shale development could keep a lid on natural gas prices for years to come. The oil companies, says Ed Siefert, president of market researcher RigData, "are all spending money like drunken sailors."

The shale business has gotten so big that some of the earlier players are starting to cash out, and the major oil companies are diving in. On Sept. 2, BP (BP) announced it was buying a 25% interest in Chesapeake Energy's (CHK) shale fields in Arkansas for $1.9 billion. A month earlier the company paid $1.7 billion for Chesapeake's Oklahoma shale properties. On Aug. 28, Royal Dutch Shell (RDSA) closed on the $5.7 billion acquisition of Duvernay Oil, which holds similar prospects in Canada.