Natural gas seems to have lost momentum with the seeming collapse of Cap-and-Trade. California seems like the notable exception on this end. However, when you look at what the EPA is doing right now you’ll see that the efforts to pull power generation into the arbitrary control of government are very much alive.
A must-read on this issue is the 10/22 WSJ story: The EPA Permitorium http://on.wsj.com/bek5W2
The gist of it is that new regulations on Sulfer Oxides allow the EPA to base the amount released on internal models, which can be arbitrarily changed, rather than physical measurements. This puts compliance of coal power producers in question and no permits for new or expanded use of coal plants will be issued for approx. another 18 months. The article is also fairly convincing in it’s argument that the EPA will effectively phase out much of our coal power production through regulatory measures over the next several years.
I like Natural Gas in this scenario because it’s the only feasible replacement for coal power generation. Nuclear power is still tied in regulatory knots and it takes a decade to bring new capacity online. Wind and solar will cost a lot of money but have very limited core power-generating potential, both because of limited reliability and low a power-density (meaning many acres of greenspace used to produce a relatively small amount of power).
Many NG plants already exist that aren’t fully utilized because the fuel is more expensive than coal, and they are cheaper and easier to build. I realize that new administrations can change the direction of this policy to again favor coal, but that will take time and NG will be the quickest to benefit in the short to intermediate term.
Many NG related companies have large dividends which is good in this environment. For tax-protected funds like IRA’s, US firms like PBT and CHK might be good plays. PDS (focuses on drilling rather than distribution) is good for this as well because it has Canadian as well as US exposure, and it doesn’t have dividends. For a normal taxable account, I would prefer the high-yielding Canadian firms like PWE because you get a tax credit for the foreign taxes withheld, and the loonie is likely to appreciate against the US dollar in coming years. ERF, AAV, and PVX are others you could check.