One reason consumers didn't spend their supposed windfall from collapsing oil prices is that gasoline prices didn't collapse as much as crude. That means consumers didn't have as much extra cash as retailers had hoped, but it helped refiners since margins—the difference between crude and gas prices—were increasing so rapidly. But now it's time to bail on one energy ETF that has substantial exposure to refiners that holders probably don't know about. Source: Scott Nations The SPDR S & P Oil & Gas Exploration & Production ETF (XOP) would seem to be immune to tightening margins among refiners—after all, exploration and production ends just about where refining begins. Despite its supposed focus on exploration and production, XOP also has tremendous exposure to refining. OPEC announced this month that it would not cut production to boost crude prices; rather it seems that OPEC continues to produce just as much oil as possible to maintain market share in the U.S. in the face of competition from shale producers. That will punish domestic producers, just the companies you'd expect to find in XOP, as this OPEC move keeps a lid on crude prices for the rest of the year. At the same time, refiners are likely to face a difficult time as margins contract. For both those reasons, it's time to take any profits in XOP and to cut losses if investors are long from higher levels. Source: Scott Nations The fundamentals are bad for both of the major subsectors in XOP—exploration and production, and refining and marketing. Even worse, investors have to really get under the hood to learn that an exploration and production ETF is so tied to refining as well. Some might argue XOP offers a little diversification in the energy space by including refiners. However, if an investor wanted to own a broad-based energy ETF to play for a rebound in energy prices—a pretty unlikely scenario in the short term—they'd be better off with the Energy Sector SPDR ETF (XLE). XLE provides just what investors think it does, broad-base exposure to energy including exploration and production, refining and marketing, oilfield services and even oil and gas transportation. Read More Street picks: 10 energy stocks ready to pop Additionally, XLE has an annual expense ratio of just 0.15 percent vs. XOP's 0.35 percent. It may not seem like a huge difference, but XOP's expense ratio is pretty rich for a purely domestic, vanilla, ETF. Energy is a huge sector of the American economy, and as more international economies increase consumption it's unlikely that energy prices will stay this low for long. If you may be inclined to bet on energy prices moving higher, XLE is the better choice among the two. Scott Nations is president and chief investment officer of NationsShares as well as a CNBC contributor. You can follow Scott on Twitter @ScottNations Disclosure: None
