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, GasBuddy.com’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.”