To their credit, gas prophets such as Aubrey McClendon, chief executive of Chesapeake Energy Corp, have been saying that gas at $5 per thousand cubic foot is not sustainable. In their laudable enthusiasm for their business, though, they may have understated just how unsustainable the price is.

Ben Dell, of Bernstein Research in New York, who has, so to speak, done some of the deepest drilling into the shale gas industry numbers, believes that the full cost of finding, developing, and operating shale gas wells, and paying an average return on capital to investors, requires a spot gas price of $7.50 to $8 a thousand cubic foot.

As Mr Dell points out, the horizontal drilling rigs that are needed to drill shale gas wells are in relatively short supply. "We think there will be a 15 per cent to 20 per cent increase in costs from last year to this year. That includes the costs of drilling and fracking [hydraulic fracturing of rock layers holding gas]."

Furthermore, the producers partially insulated themselves from gas price weakness over the past year with hedges that are gradually running off. New hedges have to be put on at lower prices. So revenues will be declining while costs are increasing

Shale gas is not magic. Production costs are high, and probably underestimated. An even more gas-dependent policy will accelerate the coming price rise. For the producers' sake, it better.

Eoin Treacy's view This is a common sense argument for somewhat higher natural gas prices and we will be led by the chart action in our analysis of the market. For the moment at least, an upward dynamic remains necessary to check the current downtrend.