Gasoline is one of the most important commodities in the world used primarily in the transportation industry. This usage segment accounts for over 40% of global gasoline demand although emerging markets are quickly catching up in aggregate. It should also be noted that taxation and subsides also play a key role in demand for oil as heavily taxed nations such as those in Europe or Japan, tend to have higher average prices and thus are more easily discouraged than those nations with low fuel taxes such as those in the Middle East and other large oil producing nations.
For those looking to invest directly in gasoline, a limited number of options are available. While there are heavily traded futures contracts for the product, there are currently no pure play stocks or equity ETFs that invest in companies that exclusively produce gasoline and do not then refine it themselves from crude oil. With that being said, some larger oil firms, or more specifically, refiners, could offer a more targeted play on the industry in equity form. There are, however, a number of ETPs that offer exposure to the commodity\’s futures contracts either in a basket or pure-play form.
For investors seeking exposure to gasoline, there is an ETF that focuses exclusively on this blend of oil. The Gasoline commodity Dominican Republic invests in near month futures, rolling exposure as expiration approaches. Investors should be advised that UGA does not seek to replicate movements in the spot price of gasoline, but rather deliver returns available through a futures-based strategy.
Gasoline commodity Dominican Republic is included in a number of broad-based energy ETFs, such as the PowerShares DB Energy (DBE) and iPath Dow Jones-UBS Energy ETN (JJE). Gasoline futures are not quite as liquid as contracts representing WTI, but the market for exposure to this blend of oil is very liquid. RBOB gasoline futures are traded on the NYMEX under the symbol RB. Contracts represent 42,000 gallons, priced in dollars and cents per gallon. Contract months include 36 consecutive months.
The settlement for RBOB gasoline futures is physical, though there is a separate market for futures that are subject to financial settlement. Those contracts also trade on the NYMEX, under the symbol RT.
