Imagine a pendulum swinging back and forth. When it is at its lowest point the PE = 0 and KE is maximal. Now imagine an observer moving along in the direction of the pendulum, with matched velocity at the lowest point of the pendulum. From the observer's viewpoint the PE is apparently zero, but the velocity and hence the KE is also zero.
From whence did the energy go? What is the correct way to do an energy balance for this case?