If the world's history of man-made disasters has taught us anything, it is to learn from our mistakes. The 1979 Three Mile Island and 1986 Chernobyl nuclear reactor incidents put a damper on nuclear power plant construction that the U.S. still has not recovered from. Now, we are faced with the worst environmental disaster in our nation's history, the Deepwater Horizon oil spill. Over 100 days into the leak, BP (NYSE: BP) claims to be just days away from permanently closing the well, but the leak will ultimately have long term-effect on how our nation views offshore drilling and the oil industry at-large. Many have their focus set on the spill, but few have looked past the leak itself into the future of America's energy sources.

With offshore drilling restrictions likely to go into effect, many will turn to alternate sources of fuel that are more accessible for extraction. Since solar and wind power are still uncompetitive with traditional fuels, and since natural gas is so plentiful in the U.S., the common heating fuel looks to be the next step in America's energy future. 

Natural gas has recently turned around its outlook from a seemingly diminishing role to a now plentiful and important resource thanks to new gas deposits and extraction methods as well as increasingly scarce and hard-to-reach oil fields, which make a push to natural gas as the only reasonable short-term alternative. Currently, the U.S. ranks as the second-largest natural gas producer in the world, and it has reserves that put it into the top five, an increasingly important statistic given how crucial energy security looks to be over the next few years. This has led to growth in both natural gas pipelines as well as liquefied natural gas (LNG) production, which have both begun to take off in recent years. The growth is so promising that the "2010 Energy Information Agency projection of world-wide production of unconventional gas increases at 5.2% per year between 2008 and 2035, compared to 1.4% for total gas production," writes John Deutch.

Although difficult, a switch to natural gas has a steep upside for many different industries. With natural gas prices cheaper than oil, it will be more attractive to the transportation sector, as many buses and trucks can be powered by compressed natural gas. Using natural gas as fuel also leads to lower carbon emissions, which helps to continue the "green" trend that our country has adopted over the past few years. 

Power plants also currently take advantage of natural gas to produce energy, which will likely increase along with the global production of natural gas. From a consumer perspective, an eventual switch would mean more money in their pockets, and less spent at the pump. With the inevitable growth of the natural gas industry, we outline three ETFs that take advantage of natural gas investments [see also The Definitive Guide To Natural Gas ETFs: Natural Gas ETF Investing 101].

First Trust ISE-Revere Natural Gas (NYSE: FCG)
This fund tracks the ISE-Revere Natural Gas Index, which is an equal-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas. The top holdings include names like Pioneer Natural Resources, and the now Exxon Mobil (NYSE: XOM)-owned XTO Energy [see also Will Exxon/XTO Deal Boost UNG?]. FCG provides some exposure to international markets, thought the majority of its assets lie in U.S. securities. From a market capitalization perspective, the majority of the funds' allocations lie in medium and large sized firms, though the fund does extend its reach to companies of all sizes [see FCG's holdings here].

United States Natural Gas Fund LP (NYSE: UNG)
This fund tracks Natural gas, with the investment objective of the fund being to generate returns based upon short-term, typically one month, futures contracts of natural gas. Holding 18 contracts, this ETF allocates roughly 70% of its assets in the U.S. with the remaining 30% dedicated to international natural gas markets [see UNG's fact sheet here].

United States 12 Month Natural Gas Fund (NYSE: UNL)
This commodity fund also tracks natural gas, with the same investment objective as UNG, but instead it uses 12 month contracts, giving investors longer-term exposure. Though UNL's expense ratio is significantly lower than UNG's, coming in at 0.75%, UNL has a much lower trading volume and is less liquid than the popular UNG fund. UNL has lost nearly 23% this year, but if you believe that natural gas will continue to expand as a viable fuel option, then this fund may be a good long-term play [see UNL's fundamentals here].

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Disclosure: No positions at time of writing.

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