In the wake of the worst environmental disasters in U.S. history, the energy sector has fallen on tough times. The ongoing crude leak in the Gulf of Mexico has further tarnished Big Oil's public reputation, setting the stage for a sharp regulatory backlash. With a moratorium on offshore drilling already in the works, uncertainty hung over a recent Oval Office address from President Obama, with many investors expecting the entire industry to pay for BP's (NYSE: BP) mistakes. While the majority of his speech was focused on addressing the oil spill, the president used the opportunity to forward his clean energy agenda. Noting that many think that the transition from fossil fuels would be too expensive for the country to handle, the president put these fears to rest, showing how serious he is about the movement. "Now, there are costs associated with this transition," said Obama, noting skepticism over the expenses associated with rolling out clean energy campaigns. "And there are some who believe that we can't afford those costs right now. I say we can't afford not to change how we produce and use energy," said Obama.

Against this uncertain backdrop, ETFs focusing on the global energy industry are intriguing options. Battered by weeks of negative headlines and unfavorable regulatory conditions, oil companies now appear to be bargain buys to some investors. Others see a further slide ahead, noting recent history as cause for concern whenever Capitol Hill gets involved. Below, we profile several ETFs from the Energy Equities ETFdb Category that could see significant volatility in coming weeks, including "traditional" energy funds and clean energy products:

HOLDRS Merrill Lynch Market Oil Service (OIH)
OIH is a unique fund in that it offers exposure to a relatively small basket of oil companies -- it consists of 15 individual oil stocks. Because the weightings of components are not rebalanced, concentration in a few names is not uncommon in HOLDRS products (see Five Must-Know Facts About HOLDRS). The top holdings include Transocean and Halliburton, two companies that have been linked to the Gulf spill.

OIH has a beta of about 1.4, indicating its tendency toward significant volatility. OIH is down about 12% on the year.

SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
State Street's XOP tracks the S&P Oil & Gas Exploration & Production Select Industry Index, an equal-weighted benchmark that represents the oil and gas exploration and production sub-industries. Restrictions on drilling could impact the operations of several of XOP's components, which include big oil companies such as ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX) as well as smaller firms engaged primarily in exploration. So far in 2010, this fund has shown great resilience to increased scrutiny on the energy industry, posting year-to-date gains over 6%.

PowerShares Global Clean Energy Portfolio (PBD)
PBD tracks the WilderHill New Energy Global Innovation index, a benchmark composed of companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy. The fund allocates over 70% of its assets to international companies, with China, Spain, and Germany receiving the largest allocations after the U.S.

PBD focuses on companies that are developing greener energy, such as firms that produce windmills and develop solar energy products. PBD has been hurt by Europe's fiscal woes; cash-strapped governments have been forced to scale back or cut government subsidies altogether. But if alternative energy initiatives gain momentum, this ETF could reclaim some of the lost ground.

iShares S&P Global Clean Energy Index Fund (ICLN)
iShares' ICLN seeks to replicate the performance of the S&P Global Clean Energy Index, which measures the performance of global companies that represent the listed clean energy universe. Like PBD, ICLN invests in far more international countries than U.S. domiciled firms, with roughly 77% of its assets going abroad. ICLN allocates the majority of its investments being to small- and mid-cap firms. With a beta of 1.44, ICLN has a track record of volatility that should continue as the uncertainty looms over the global energy industry.

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Disclosure: No positions at time of writing.

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