Exchange traded funds (ETFs) that consistently found themselves at the head of the class with double-digit returns in the first half of the year are suddenly having a different view of things as fuel prices continue their descent.

The price of gas has dropped for 25 consecutive days, and the average for a gallon on Friday was $3.85, reports the Associated Press. The cheapest gas can be had in Tulsa, Okla., where a gallon costs $3.50. Anchorage, Alaska, has the priciest, at $4.37. Prices are still $1 more than they were a year ago, says CNN Money.

In early trading today, oil is near the $115 mark. That’s despite the increasing hostilities between Russia and Georgia in the Caucasus region, which is a key transit route for oil and gas from the Caspian, reports Alistair Sharp for Reuters. Since July 11, oil has lost 21% of its value.

Natural gas isn’t immune, either, as futures have fallen 9.2% in just two weeks, says Ben Casselman for the Wall Street Journal. Production of the fuel is way up at 8% this year, and the growth is expected to continue in line with demand, which is up 5.5% this year through May.

Some analysts are talking about a “gas glut,” which in the short term could lead to lower heating and cooling bills. But the effect could be temporary, because if natural gas closes below $8 per million BTU, production will be scaled back – thus sending prices back up again.

ETFs that could continue to be affected by the drop-off in fuel prices include:

  • iPath DJ-AIG Natural Gas Total Return Sub Index (GAZ), up 6.9% year-to-date
  • PowerShares DB Oil Fund (DBO), up 25% year-to-date
  • United States Natural Gas (UNG), up 7% year-to-date
  • United States Gasoline (UGA), up 6.4% since April 18 inception

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.