The signs are encouraging that after years of price volatility that have led to boom-and-bust cycles, the cost of natural gas is stabilizing and production appears to be gradually increasing.

That's good news for Wyoming, which relies most heavily on taxes on natural gas to fund state government operations.

Despite flush natural gas storage across the nation, prices have remained relatively stable in 2009. Last week natural gas sold at Wyoming's two main trading hubs averaged about $4.18 per thousand cubic feet, compared with $4.48 at Henry Hub in Louisiana.

While prices are much lower than they were in 2007, it's important to note that Wyoming gas at that time was being sold for about $5 less per thousand cubic feet than its counterparts. The addition of the Rockies Express pipeline and other export capabilities have allowed gas producers in Wyoming and other Rocky Mountain states to become more competitive.

"We're relatively upbeat about the Rockies right now, because of the differentials and pricing we're seeing are a lot better than they've been in the past," Chip Minty, spokesman for Devon Energy, told Star-Tribune energy reporter Dustin Bleizeffer. "The transportation out of the Rockies is better, and that improves the economics of production in Wyoming."

While there's been a huge drop in drilling activity in the past year, some of the major players in the state are looking at moderately increasing levels of drilling for 2010.

Williams Production RMT Co., Wyoming's largest natural gas producer, expects its drilling budget to remain at about $1 billion annually. But Williams spokesman Kelly Swan told Bleizeffer the company is hopeful that it will increase its Powder River Basin activity.

The Rockies won't be able to corner the market on natural gas. Major discoveries have been made in Texas and Louisiana and such nontraditional states as Ohio, Pennsylvania and Michigan. Innovative technologies such as hydraulic fracturing and horizontal drilling are recovering reserves previously considered inaccessible, so national concerns about supply are disappearing.

But the overall advantage of natural gas as the cleanest-burning fossil fuel is being heavily touted by the industry, and should ensure that the demand for Wyoming natural gas remains steady.

Tony Hayward, chief executive of BP, wrote an interesting column for the Washington Post that we reprinted Sunday. He sees natural gas as vital to the nation's attempts to reduce carbon emissions to combat climate change.

Hayward pointed out that BP is a major investor in demonstration projects to test carbon capture and storage, as well as exploring alternative resources such as wind and solar. But he added, "I don't think we can afford to wait. Until renewables gain a sizable share of the power sector, (carbon capture and storage) becomes available, and nuclear energy ramps up, the only realistic option is increasing use of natural gas."

"Natural gas is here. It's cleaner. It's affordable," Hayward concluded. "What are we waiting for?"

State officials should applaud the news that after many years of Wyoming not receiving a fair price for its natural gas plus capacity problems, the market here finally appears to be stabilizing. An overnight boom won't be happening, but steadiness would indeed be welcome.