1. There will not be a windfall profits tax while bush is president. After he leaves, there may be a change in taxes, but with US reserves running out, no tax will focus on e&p's looking to develop old fields or find new ones.  Of course there will be market wide sell offs - thre have been three since I began investing in e&p's eighteen months ago, the shoulder seasons are dangerous. That is what volatility means - however, as long as the long-term direction of oil prices is up, these companies will continue increasing profits; I simply stay in because timing is too tough. Regarding US vs foreign - the last 1% from the old fields might fetch as much as the first 99%, and represent more profits to boot, which is the main point, and meanwhile there is no risk of nationalization. The majors have no choice - they produce so much that they must replace their older, labor-intensive US fields with foreign ones.  However, the majors are not as profitable as the small e&p's (I measure this as net/production), and, equally important, are not growing reserves as are a few small ones.

2.  Policymakers aren't doing much one way or the other anyway, the question is, what are investors, or e&p's for that matter, to do while gas price remains soft?  Some investors will move away (like me), some will hold, few new investors will buy into gas right now, so shares will ease back and become a buy at some point in the future as we get closer to where prices reverse to the upside, maybe sharply (my moving away from gas is timing, not my strong point, will see if I get it right this time). E&P's will carry on in a more difficult environment because they have expenses to pay, maybe not contracting for quite so many rigs (85% of us rigs are looking for gas), freeing up some rigs to look for oil.

Hurricanes did not take that much gas off production, we still entered last winter with a very comfortable storage, higher than the five-year avg. THere was never a time when storage justified last winter's record prices... this was a case of market irrationality, maybe hedge funds pushing too hard. There is no chance we will not have a record amount in storage, my guess is we will add at least the avg of the past ten years thru the first week of nov, usually the last week that storage is added, meaning storage will climb from the current 2905 to 3725. I see the front month dropping to around 6/mcf every month through next summer... and, even at these lower prices, fertilizer and plastics precursor manufacturers cannot compete with foreign suppliers closer to cheap cas, not least qatar, so the us is quickly shedding around 20% of gas demand as we move to import more of our energy needs.