Right now coal is still king. Coal provides 50% of the electricity production for the U.S. while natural gas provides about 20% of that production.

Now, however, with an energy bill in Congress, the battle lines are being drawn between the coal and natural gas companies. Each side is marshaling an army of lobbyists to descend upon Congress. Each side will make pitches to Congress to gain favor for their companies.

Coal-mining concern Alpha Natural Resources (NYSE: ANR) is trading sharply lower today after cutting its full-year earnings and production forecasts. Due to lower coal demand from steelmakers, ANR now expects net income of $175 million to $185 million for fiscal 2008. Previously, the commodity firm predicted full-year earnings of $230 million to $270 million.

As a result of waning demand, shipments of metallurgical coal will be reduced by about 500,000 tons in the fourth quarter. Going forward, ANR stated, "the outlook for metallurgical coal sales shipments and pricing will remain uncertain until such time as the financial markets begin improving and economic activity shows tangible signs of recovery."

Additionally, Alpha said it will close its mining operations at West Virginia's Whitetail Kittanning mining complex. The company is citing "adverse geologic conditions and regulatory requirements" for the shutdown, which will occur at the end of December. A total of 329 employees will be affected by the closure.

Whether it's a recession or an economic boom, one thing doesn't change, the need for energy. And until technology leaps ahead, coal is the largest producer of fuel for the generation of electricity in the world. It's also the most abundant fossil fuel in the United States. Coal is obviously not recession immune as people tighten the reigns on their lives and cut back on electricity consumption, but the shear necessity of electricity makes the coal industry fairly resistant. An investment in an exchange traded fund (ETF) that is centered on the coal industry is a great way to hedge your bets by investing in a pool of successful companies in the coal field.

Market Vectors Coal ETF (NYSE: KOL) seeks to replicate the price and yield performance of the Stowe Coal index, which provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry. With KOL you'll own shares of some of the most noted coal companies in the world, including Arch Coal Inc. (NYSE: ACI), which specializes in steam and metallurgical coal; CONSOL Energy Inc. (NYSE: CNX), a large provider of fuel for electricity in the United States; Alpha Natural Resources Inc. (NYSE: ANR), another leader in steam and metallurgical coal; and Peabody Energy Corp. (NYSE: BTU), an exploration miner and coal producer worldwide, as well as several other highly rated coal companies across the globe.

Market Vector charges only a 0.65% fee, a fraction what a professional money manager would charge you to analyze research and pick coal mining stocks with this level of global reach. Recently KOL has gone through a typical correction for this commodity sector, but then suffered a greater hit as Asia saw a 20% decline in spot prices for thermal coal. The result? A better deal for those currently willing to dive into coal as an investment. KOL is up 14%, so maybe there's some light at the end of the mine.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

The United States is a nation whose electric power generation system and grid is becoming increasing inadequate, even as the nation grapples with another energy problem -- the $4 per gallon gasoline era.

Moreover, an economic slowdown and a relatively mild summer have to-date reduced the typical electric load electric power generation plants would face, but that respite will end when the U.S. economy starts to expand at a healthy rate again. And when it does, electric power demand will increase.

What's one model the United States could follow to generate more electricity while the same time reducing coal-based pollution and climate change? France.

That's right: France. Nuclear power is experiencing a mild comeback in the United States, with 34 new reactor applications on file at the U.S.'s Nuclear Regulatory Agency. In France, it never left. Further, had the United States followed the French model, the U.S. would be vastly more energy self-sufficient today.

France: liberty, fraternity, equality, fission

Nuclear power never went out of style in France, and for this reason France is decades ahead of the United States -- and much of the world, for that matter -- regarding energy self-sufficiency, The New York Times reported. An astounding 77% of France's electricity comes from its 58 nuclear power plants, and it is a net-exporter of electricity to Europe. The United States has 104 nuclear power plants, which account for only 19.4% of its generated electricity, according to U.S. Department of Energy data, The Times reported.

During July, the prices of oil exploration and coal stocks mentioned in my newsletter tumbled precipitously. For example, Arch Coal (NYSE: ACI) and Peabody Energy (NYSE: BTU) lost roughly a quarter of their value by the end of July and Ultra Petroleum (NYSE: UPL) and Southwestern Energy (NYSE: SWN) which had been up over 40% through June ended July up a relatively paltry 4% and 11% respectively.

I find this interesting because it violates one of the basic theories I have about what moves stock prices. This beat-and-raise theory says that if a company beats earnings estimates and raises its guidance, then the stock will rise. Otherwise it will fall. In the case of these four companies, each of them with the exception of Ultra which did not report, reported doubling or tripling of earnings and raised their guidance.

So why did their stocks fall? In the case of the oil and gas companies, it could be because of declining oil prices. Those peaked at $146 a barrel and recently traded at $127. But I am not aware of any diminution in the price of coal for which demand is strong due to Chinese and Indian infrastructure investment among other factors. Coal is used to make steel and to fire up power plants.

With crude oil prices soaring, shares in coal and fertilizer companies have also been climbing for the past year. Barron's offers a survey of the momentum plays, pointing out some opportunities and risks when investing in coal and fertilizer stocks.

Talking about risks, Barron's underlines the fact that it can be difficult for investors to put their hard earned money into a stock that is already trading near its highs. But as they say, the trend is up unless proven otherwise, and we might take this into account when picking our trades. For example, back in April, it looked like Mosaic Co. (NYSE: MOS) was facing technical weakness, but this did not last long and the company was able to rebound.

Now let's take a took at the coal sector. Data shows that the Dow Jones U.S. coal index gas gained more than 50% for the past year. While James River Coal Co. (NASDAQ: JRCC) has quadrupled this year, Peabody Energy Corp. (NYSE: BTU) has been seeing some weakness, and this might be a sign that the sector could face tough times ahead. The first concern tied to supply and demand appeared for Peabody when we began to notice that volume on rally days slipped, while volume on declining days has increased.

In light of oil's rise to triple-digit prices, the United States' inability to pass an energy policy aimed at increased efficiency, renewable energy, and energy independence, represents an opportunity squandered -- on two fronts: transportation and power generation.

True, oil has retreated from the $135 range to the $125-128 range, but the nation now faces record-high gasoline/diesel prices, along with high prices for heating oil, natural gas, and coal. As a result, the broad-based disposable income -- so essential for U.S. economic growth -- has been squeezed, with many economists now arguing adequate GDP growth is not possible, if energy prices remain at current levels.

At minimum, the U.S. faces a period of economic and social adjustment -- corporate, public, personal -- as it copes with the brave new world of $4 gasoline ... and that's if gasoline remains in the $4 per gallon range. A variety of scenarios could quickly send gasoline over $5 per gallon and higher in 2009.

The United States Government has canceled support for a clean coal demonstration project after the project's development costs nearly doubled, to $1.8 billion, citing the need to limit taxpayer exposure, according to a New York Times report.

Further, more than a decade into the research process, it remains an unanswered question whether the clean coal technology -- capturing and injecting carbon dioxide back into the ground -- can be executed in a safe and cost-effective manner.

Among other hurdles, scientists need to determine which soil formations are most environmentally appropriate for holding and organically processing the carbon dioxide, and that don't contain the risk of dioxide bubbling back to the surface, or polluting ground water.

Many energy experts are looking to clean-burning coal as an alternative to crude. If that works out, the price of oil could come down as the US and other big countries like China move to the old source of energy that is becoming attractive again.

But the cost of getting clear-coal to market may be too high for it to be practical. According to The New York Times, "the failure to start building, testing, tweaking and perfecting carbon capture and storage means that developing the technology may come too late to make coal compatible with limiting global warming."

Do those problems really rule coal out as a big source of energy? Maybe not. The decisions to fight dependence on oil may involve some very hard compromises. Oil-based energy hurts the environment. Ethanol drives up corn prices at a time when commodity inflation is already pushing food prices much higher.Governments and individuals are going to have to decide whether cutting the need for oil is worth additional pollution or whether $5 gas is a better way forward.

The same argument is beginning to move to nuclear power. There are fears that this source of energy may be too dangerous because nuclear power plants sometimes have dangerous leaks. But nuclear can provide a huge portion of the electricity needs of many nations, as France has already shown.

With oil at $120 or more, energy consumers can't have it both ways. The days of cheap energy are gone, and the age of cheap, clean energy may be years away. In between, the trade-offs are ugly.

Douglas A. McIntyre is an editor at 247wallst.com.

When oil was at $65 a barrel, almost no one believed it would double. There were a few nuts making the case, but they were ignored like Galileo was when he said the Earth moved around the sun.

Now, it is hard to find analysts who do not believe oil is going to move over $140 a barrel, and, perhaps above $200. Their reasoning is sound enough. Demand in emerging nations like China and India is still increasing. While crude use in the U.S. may be off slightly, it's not off enough to matter. Supplies may be drying up as fields in the Middle East, Mexico, and Russia age. A political catastrophe in Nigeria or Venezuela could cut production.

Against all that, a case for a sharp drop in oil prices is quietly forming and its logic is powerful but poorly understood.

The first argument that oil is too high is that it has been pushed up in part by speculators rushing to cover bets that crude will fall. It is a bit like a "short squeeze" in stocks. Once the "covering" is done, oil prices will face less pressure on the upside.