Last April, the price of natural gas in North America fell to a decade record low of $1.90 per million British thermal units (mmBtu). As recently as 2008, gas was close to $14/mmBtu. Now, with low prices and abundant shale basins in the US, many analysts are predicting a prosperous future, even energy independence, fueled by inexpensive natural gas.

If you look more closely, the picture is a bit more complicated. Back in 2008, no one foresaw the explosive growth in shale gas production. Likewise, few now see a reversal. However, fueled by low prices, gas demand is climbing rapidly while production may be peaking. Here is a recap of the recent past and a likely future scenario.

Shale Basins Unleash Abundance

Starting in 2009, technological advances in horizontal drilling and fracking of shale basin wells greatly expanded North America’s gas supply. The result? As the chart below shows, we experienced an overabundance of natural gas in just a few short years.

Source: Natural Gas Weekly

Now, however, rapid production increases have driven prices so low it no longer pays to drill. Large producers such as Chesapeake Energy (NYSE: CHK) are curtailing drilling. Prices have rebounded some; April may have been the bottom.

Stagnant traditional markets and zero export capability made things worse. Last winter’s mild weather depressed heating demand across the US and Canada, just as supply was peaking. Also, a recession-racked US needed less gas for industry.

Today, North America has no export terminals for liquefied natural gas (LNG). Consequently, the US and Canada are effectively shut out of thriving overseas LNG shipping markets.

However, markets are reacting and change is coming. With such low prices for natural gas, it comes as no surprise that users of coal, nuclear, oil, wind, solar, and even geothermal power are looking at gas. Electric power generation, in particular, is in the midst of a massive shift from coal to natural gas. Peabody Energy (NYSE: BTU), a major US coal producer, has seen shares fall almost two-thirds over the last year. New power generation is now mostly gas fired.

As noted above, North America does not export LNG. However, companies such as Cheniere (NYSE: LNG) have reversed themselves and now are converting several import terminals to export. Exports may start as soon as 2015. Overseas, LNG demand is very strong. Japan has shuttered all its nuclear plants. The replacement? Imported LNG. South Korea, China and other Asian nations also have a strong and growing LNG demand.

In the US and Canada, compressed natural gas (CNG) is slowly making inroads as a fuel source for vehicles. Westport Innovations (NSDQ: WPRT) converts gasoline engines to run on CNG. Companies such as Waste Management (NYSE: WMI) are converting their trucks to CNG. Honda (NYSE: HMC) now has a Civic that runs on natural gas.

It is only natural that energy users will look at inexpensive gas. However, will cheap gas power the US into a new age of energy self-sufficiency? Not so fast. A closer look at shale gas reveals some daunting facts.

It’s true that fracked wells initially produce a lot of gas. However, initial production rates drop quickly and new wells, often funded by debt, are constantly needed to maintain production. Once a certain price level is breached it’s no longer economically feasible to drill new wells.

Poised to Benefit

Surging demand for gas for power generation, manufacturing, vehicle fuels, and future LNG exports will likely combine with decreasing production to catalyze a steep rise in gas prices within a few years. Traditional markets also should rebound as normal winter weather returns. It may be time to take a stake in solid, profitable companies that hold large shale acreage positions.

Many companies own large shale acreage positions yet are not dependent on gas. Highly profitable oil and natural gas liquids (NGLs) are often found along with gas. Companies that derive profits and cash flow from these liquids can afford to sit on gas reserves while waiting for prices to rise.

Apache (NYSE: APA), Devon Energy (NYSE: DVN), EOG Resources (NYSE: EOG), and Encana (NYSE: ECA) are all profitable, well managed and worth a look. A caution on gas heavy Encana: Many of its protective hedges expire next year.

Natural gas prices probably won’t rise quickly, but over the long haul the above companies seem a solid investment. However, if the euro zone crisis precipitates a global collapse, everything heads south and cash is your only friend.

Bruce Vanderveen is a Florida-based freelance writer and investor.