Given the weakness in the energy sector this morning, I think it is important to take a step back and take a closer look at the issues surrounding natural gas.

In the IA portfolio, our natural gas play is Chesapeake Energy (CHK).

In its recent Short Term Energy Outlook, the Energy Information Administration boosted their forecasts for natural gas prices in the near term and through 2006. The EIA doesn't expect a full recovery of Gulf of Mexico production until the end of 2nd quarter of 2006. Consequently, winter prices are expected to be over $10/mmbtu, and average prices for both 2005 and 2006 are predicted to be over $9/mmbtu.

Natural Gas has been weak because local distribution companies have adequate supplies due to warmer weather. I can assure you that this will change.Going forward, seasonal temperatures will swinging back and forth between above and below normal.

In its most recent forecast, the EIA says that home heating bills this winter will be lower than the original predictions after Hurricanes Rita and Katrina. Nonetheless, residential heating costs will be significantly higher than last year. The EIA forecasts that natural gas heating expenses will rise by 41% this winter compared to the previous year.

As far as Chesapeake Energy is concerned, the company's CEO, AUBREY K. MCCLENDON, has been buying his company stock in a big way. Let's look at some of his purchases:

30-Sep-05 3382 shs @ $38.25
14-Sep-05 305,623 @ $32.72
26-Aug-05 150,000 @ $28-28.50
25-Aug-05 50,000 @ $28.39-28.50
24-Aug-05 50,000 @ $28.09 - $28.2
23-Aug-05 50,000 @ $27.25 - $27.35
18-Aug-05 50,000 @ $26.55 - $26.6
17-Aug-05 50,000 @ $28.05 - $28.18
16-Aug-05 250,000 @ $27.82 - $28.35
30-Jun-05 100,000 @ $22.94 - $23.25
29-Jun-05 25,000 @ $22.88 - $23
24-Jun-05 25,000 @ $23.23 - $23.25
22-Jun-05 25,000 @ $23.14 - $23.16
21-Jun-05 25,000 @ $23.05 - $23.06
17-Jun-05 50,000 @ $23.19 - $23.31
16-Jun-05 50,000 @ $22.70
15-Jun-05 75,000 @ $22.48 - $22.5
14-Jun-05 50,000 @ $22.26 - $22.3
10-Jun-05 30,500 @ $21.61 - $22.3

I could go on, but i think you're starting to get the picture. Mr. McClendon is buying huge amounts of CHK for a reason. Is the reason because of the current energy crisis? Or is the company up for sale?

Chesapeake is the second largest producer of natural gas and the most active driller of new oil and gas wells in the United States. It is estimated that the company owns interests in approximately 29,800 producing oil and gas wells, and has proven reserves of 7.3 trillion cubic feet of natural gas.

In my opinion, and especially at these levels, CHK is a good bet.