West Virginia University football coach Bill Stewart absurdly hit the nail on the head this week when he said the state has enough gas, oil, coal and brains to power the world. Great way to end a press conference.

And to a point, he was right. But right now, for companies like Chesapeake Energy the key to profitability might be ratcheting down the choke on new gas production. Down go rigs, down goes line pressure, down goes Frazier.

Going forward, gas companies in the United States have a problem. They've been doing such a fantastic job finding natural gas that supplies are at all-time record highs on the continent. On the flip side, use is down. A lot of this nation's natural gas usage goes not to heat homes or cook steaks -- two fairly inelastic demand situations.

But the rest goes to industries that rely on the strength on the world economy. Natural gas use by chemical producers is down. Natural gas molecules being busted up to make ammonia fertilizers are fewer. Apply that to any other industrial capacity, such as metalworking or peak electrical production.

There's too much gas for the short term, pushing the cost of that thousand cubic feet of gas down under $6 at the wholesale level. Of course, your local gas utility is still probably charging you double that for the coming winter.

But back to Chesapeake, whose roller-coaster stock ride up to $74 and down to $11 per share took a 30 percent move in one day this week. They keep saying they have things figured out.

The company held what I would term a "we're-still-awesome" conference call Dec. 8, when CEO Aubrey McClendon pretty clearly spelled out the company's hedges and ability to be break even or profitable all the way down through natural gas pricing at $4 per MCF or less.

The company plans to do more asset sales and production placements and get its cash position up to $4 billion or more, double the mark today.

More important, the company is cutting the drilling budget by nearly a third and land acquisition spending by 78 percent. While this is going on, more and more of the drilling costs of CHK are being paid by partnerships with British Petroleum, Plains Exploration and most recently Statoil here in the Marcellus shale.

While drilling will shrink for Chesapeake and drills be "laid down," it hurts the smaller producers faster and further. Costs in the four massive American shale plays are all less than $2 per MCF assuming they continue to perform as planned. Whether gas is at $4, $7 or $14, there's still a good bit of profit margin.

But $4 gas will bring drilling of conventional wells and ultra-deep wells to a virtual standstill continent-wide. Less capitalized producers, and ones with issues obtaining drilling funds, will have to shut in and give up for a while. This happens every few years it seems.

The critical measure is this: Most of the new gas production in the past five years has come from these shale plays. The defining characteristic of the new shales is the very fast depletion; the bulk of these wells in the Fayetteville, Barnett or Marcellus give up most of their gas over the first two years of production. They aren't like oil wells that bleed out a gallon an hour for the next 40 years.

If the drills stop working for even six months, gas supplies should contract pretty quickly back to 2004 levels. The great news, at least for bigger operators, is that they can react to the market ups and downs very quickly.

And with less work in the patch, McClendon thinks he can get the company's drilling costs to shrink by at least 10 percent in the next year as the supply of roughnecks and drills exceeds the demand of new exploration shorter-term.

Sub-economic production can continue for a while, but a lot of gas guys can't survive long at $5 gas and $42 oil, and Chesapeake can wait them out.

Of course, no call with McClendon is complete without a quick scope of the political environment. Says the new energy committee chair in the U.S. House, Henry Waxman, may have a problem with hydraulic fracturing of wells. And, of course, there's coal.

"The Obama administration is going to be very tough on coal. We're very excited about that," said the Chesapeake CEO. according to a transcript of Monday's call.

Rob Cornelius follows energy and other markets for The State Journal. His e-mail address is robcwv@gmail.com.