Cold Snap Boosts Energy Funds

As the temperature drops across the country, energy policy is heating up in Washington, D.C. The cold weather has spurred demand for the petroleum-related products that heat our homes.

And on Capitol Hill, the Democratic-controlled House of Representatives passed a sweeping bill to take back the tax breaks awarded to oil companies and to force the renegotiation for oil leases in the Gulf of Mexico. Also, the president gave his State of the Union speech plugging alternative energy sources.

Money to fund President Bush's alternative energy initiative would come from the renegotiated leases and the savings from the $7.6 billion tax break being rescinded.

The large oil and gas companies still had a good week, thanks to higher energy demand and uncertainty as to whether the legislation will pass in the Senate. At the same time, alternative-energy stocks shone, thanks to the president's call for a dramatic increase in renewable fuels over the next 10 years.

With a total return of 5.16% for the five trading days ended Jan. 25, the top performer this week was the (FSNGX Quote)Fidelity Select Natural Gas Portfolio. After struggling earlier in the month, the fund is now at break-even on a year-to-date basis.

It has 78.8% of assets invested in oil and gas stocks, with 13.2% in oil and gas services, 1.5% in electric, 1.3% in coal, 1.3% in iron/steel and 0.81% in construction and mining machinery.