“It was the best of times, it was the worst of times.” Justice Litle thinks Dickens’ classic line  provides an apt description of today’s markets. Sure, this year has been hell. But it has also created some amazing opportunities for contrarian investors. Justice says this is most apparent in the oil and natural gas market, where irrational risk aversion has made most people forget the fundamentals.

Energy investors may find themselves at odds in weighing whether to put their money into fossil fuels or green alternatives. Two separate articles in today’s Wall Street Journal provide a good backdrop for the current dilemma. Ultimately, we’re of the opinion that it’s still too early for alternative energy to make a convincing business case.

Energy prices continue to tumble on recession fears and a US dollar rally. For investors that are long-term bullish on energy markets, this represents a great buying opportunity, says Andrew Snyder. He expects coal producers like Massey (NYSE:MEE), Peabody (NYSE:BTU) and James River Coal (NYSE:JRCC) to see big increases in their valuations in the coming year.

The election last night of Barack Obama to the White House has many green investors cheering, but their elation may be short-lived. For one, the ROI of alternative energy is still pegged to the price of fossil fuels. Second, environmentalists may find themselves at cross-purposes with one faction leading the charge for a greener grid while the other seeks to protect endangered species and offshore territory from solar arrays and wind farms.

T-3 Energy Services (NASDAQ:TTES) provides essential safety equipment for oil and gas rigs. Though drilling activity has been affected by the fall in commodity prices, Chris Mayer says the stock has been massively oversold. Today it is trading at $19, down from a high of $84 last year. Given its healthy cash flow and strong international growth outlook, Chris says a move back to $60 is on the cards.

Russia, Iran and Qatar, the world’s three biggest natural gas producers, publicly said they intend to form a natural gas cartel that would mimic OPEC for oil. Irwin Greenstein says this could create a major inflation headache across Europe and Asia. And that could send investors running back to the US.

The US consumer is on life support. Retail sales cratered in September, and consumer confidence indexes are at rock bottom. Uncle Sam is gearing up for a new New Deal to resuscitate the patient, says Justice Litle. It will focus on alternative energy projects… and could create the next big bubble.

Commodities across the board are being taken down by the deepening credit crisis. But energy policy is a big issue in the coming presidential elections.

Energy investor T. Boone Pickens says “natural gas is the fuel of the future.” He also says water will become an increasingly scarce commodity with major implications for the agricultural sector.

Chris Mayer agrees with Pickens. He says once the financial crisis ends natural gas and water stocks will attract big bucks.

Is nowhere safe? Even physical assets - which are usually considered a safe-haven from stock market turmoil - have fallen sharply in the last month. Only gold and silver have held up against the tide…just. Commodities specialist Lee Lowell says there will be plenty more volatility in the weeks to come. But he says those who do not join the panic selling will win out in the end…

E.On (OTC:EONGY) took a bite out of Gazprom (OTC:OGZPY) today. Germany’s largest utility company just got nearly a quarter of Gazprom’s Yuzhno Russkoye natural gas field. And all it had to do was give back some of the Russian giant’s stock. Not bad.