This past year has been more fascinating than most. Most industry indicators were off the charts. Energy-supply topics dominated the headlines and even colored presidential politics. The peak-oil chorus grew louder as more people believe it, and the alternative-energy call is becoming a cacophony.

Crude oil neared $100 a barrel at press time, partly on fears we won't have enough of the stuff. On the other hand, the U.S. rig count passed 1,800 for the first time in decades due to a surge in drilling for natural gas. More drilling is ahead: A blow-out central Gulf of Mexico lease sale drew $3 billion in high bids, the most since 1983.

The Philadelphia Oilfield Services Index (OSX) rose above 300 for the first time. Upstream MLPs have re-emerged as successful public investment vehicles and they have been aggressive, able to pay up to $1 billion for choice assets.

The much-vaunted resource plays continue to deliver: Gas production in the U.S. rose for the first time in years. The new Independence Hub in the deepwater Gulf is ramping up to output of 1 billion cubic feet a day by year-end. Barnett shale production has reached 2.8 billion a day.

And four-year-old independent Leor Energy hit a home run. It sold to EnCana USA for $2.5 billion, thanks to its interests in a hot resource play-Deep Bossier wells in East Texas that flow 45- to 65 million cubic feet a day. The price works out to a startling $18 per thousand cubic feet of proved reserves; EnCana is looking forward to drilling the hundreds of probable locations.

Third-quarter results showed that although the majors' domestic gas production is still slipping, the biggest U.S. independents are enjoying the ride. XTO Energy's gas output rose 29% year-over-year and is predicted to go up another 17% in 2008 (some due to its purchase of Dominion E&P assets).

Devon Energy's third-quarter Barnett output reached 856 million a day, up 32% from the prior year. Chesapeake's Barnett output was up 43%; its Fayetteville shale production doubled. Southwestern Energy reported net Fayetteville shale production in the first nine months, 33.6 billion cubic feet (Bcf), was up fivefold from a year earlier. EOG is on target to grow production 11% this year, even as it has overspent cash flow for six consecutive quarters.

But is there a downside to all this success?

Looking to 2008, Sanford C. Bernstein analyst Ben Dell thinks so. He sees U.S. gas production rising another 1.7% to 66.1 Bcf a day, while demand will be slightly less, at 65.8 Bcf a day. This could lead to record storage levels again and more downward pressure on gas prices.

"Optimism that higher gas prices are inevitable is making leading operators continue drilling. This, in turn, is the primary barrier to the market bottoming and a true correction," Dell says.

Remember, too, that more gas is coming. The first new liquefied natural gas terminal in the U.S. in 20 years, Cheniere Energy's LNG plant in Cameron Parish, will open in second-quarter 2008, and the Rockies Express Pipeline will soon be moving more than 1 billion cubic feet a day from Wyoming gas fields.

As domestic gas supplies grow, public confusion about energy seems to worsen. It is the industry's job-not the government's-to spread the word about facts and conclusions in the National Petroleum Council report, "Facing the Hard Truths About Energy," warned speakers at the annual IPAA meeting last month.

More people are starting to believe we are running out of oil and gas and that alternative fuels must be the replacement. But how true is this?

"The industry has to prove to the public that the resources are there and that we are not moving away from oil and gas," said John Ming, president of the Research Partnership to Secure Energy for America (RPSEA), at Hart's Optimizing Mature Assets conference in November.

Meanwhile, Shell Oil Co. president John Hofmeister just concluded his 18-month, 50-city tour that tried to explain energy issues to Americans. His conclusion? There is a lot of ill-informed nonsense out there, anger at high energy prices, and fear.

"Ladies and gentlemen, we are not running out of oil and gas. There are trillions of producible barrels out there that are untouched. The question is how fast can you get to them?" Shell plans about $23 billion in capital expenditures this year and next (with just tens of millions on alternative energy).

Meanwhile, supply constraint was the message at the ASPO-USA World Oil Conference on peak oil in Houston. Members of ASPO (Association for the Study of Peak Oil) think we are headed for trouble, and soon. A travel agent in the audience said he tells clients if they have always wanted to see Australia, they'd better go now because in five years, there may not be enough jet fuel for anyone other than the military.