ETF Trends
ETF Trends

The relentless climb in gas prices this year to over $4 a gallon in some areas of the country is squeezing consumer budgets and triggering a rally in exchange traded funds linked to gasoline.

U.S. Gasoline Fund (NYSEArca: UGA) is up nearly 16% year to date and could provide a vehicle for consumers looking to hedge pain at the pump. Gas prices averaged $3.59 a gallon in the latest week.

“We are on course to break through $4 nationally,” Patrick DeHaan,’s senior petroleum analyst, told ABC News. “Some of these major metro areas could hit $4.50 or even higher. This year we may have a run for the money in knocking down the record from 2008.”

The rise in gas prices has mirrored the rally in crude oil, which traded above $106 a barrel this week. Supply worries driven by political tensions in Iran and the Middle East could send gasoline even higher.

“Crude prices have continued to hover around the $100 barrel mark,” Shane Pochard, a spokesman for Speedway, told the Lexington Herald-Leader. “The volatility overseas is affecting that. Because of that, you’re seeing quite a bit of volatility at the pump as well. … Typically in the wintertime, you’ll see a little bit of a break in crude and ­gasoline prices, but that just hasn’t occurred.”

The gasoline ETF holds about $95 million in assets and tracks futures contracts rather than the spot price for gas.

Economists are worried rising oil and gas prices could threaten the economic recovery.

“Gas prices are already at their highest levels ever for this time of year, and some analysts predict they’ll hit a national average of $4 a gallon in May. Some regions are even expected to see $5 gas by Memorial Day,” CNNMoney reports.

U.S. Gasoline Fund

The opinions and forecasts expressed herein are solely those of John Spence, 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.