Your argument is basically correct long term at equilibrium. There is lots of gas and it price should drop to the marginal cost of the highest cost producer. However that is not how it works in the short run and mid term across global markets. Is the price of oil always at the marginal cost of production? When you are the low cost gas producer you can make a fortune as the price fluctuates. Do you really think Exxon bought XTO without understand the the economics?