Gas prices have reached record highs this year, breaking one set in 2008, not accounting for inflation.
While the price of crude oil is the significant influence on gas prices, it’s not the whole story. Back in 2008, the price of a barrel of oil exceeded $140, with gasoline peaking at $4.11 per gallon. A barrel of oil has topped out today at approximately $120 a barrel, with gasoline exceeding $5 per gallon.
The national average price of gasoline fell this month, as states like New York, Georgia, Florida and Connecticut suspended state gas taxes.
In the ETF world, there is only one pure-play gasoline ETF. The United States Gasoline Fund LP (UGA) is designed to track gasoline prices. Its objective is to provide results corresponding to “the daily changes in percentage terms of the price of gasoline (also known as reformulated gasoline blendstock for oxygen blending, or “RBOB”), for delivery to the New York harbor, as measured by the daily changes in the price of the Benchmark Futures Contract, less UGA’s expenses.”
UGA is invested in “listed RBOB futures contracts and other gasoline-related futures contracts and may invest in forwards and swap contracts.” According to the fund, UGA offers “commodity exposure” without using a commodity futures account = including features like intraday pricing, as well as market, limit and stop orders.
A traditionalist might look at the energy sector overall and want to play it long or short leverages without identifying the subcategory like one would if pursuing gasoline.
The Direxion Daily Energy Bull 2x Shares (ERX) and the Direxion Daily Energy Bear 2x Shares (ERY) seek daily investment results, before fees and expenses, of 200%, or 200% of the inverse (or opposite), of the performance of the Energy Select Sector Index. These funds track a commodity-related equity index, consisting of a basket of energy-related stocks, and do not invest in physical commodities.
There are also unleveraged options, and the Energy Select Sector SPDR Fund (XLE) could fit the bill. This ETF “seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index.” The index seeks to provide an effective representation of the energy sector of the S&P 500 Index” and “to provide precise exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries.”