Just How Low Can Gas Prices, ETF Go?

There are whispers of $1 a gallon gas at the pumps again, but this would mean oil and gas exchange traded funds (ETFs) would have to take more beatings in a further downward descent.

Because recent rapid drops in oil prices with gasoline prices dropping 50 cents just last month, people are starting to think they can experience $1 a gallon for gas once again. Consumers last saw prices like those in March 1999, when it clocked in at 97 cents a gallon, writes Mark Williams for the Associated Press. Nationally, pump prices are now an average of $1.71 a gallon.

Since the abhorrent month of July when oil hit a record high of $147.27 per barrel and gas was $4.117 per gallon, five months have gone swiftly by and oil has fallen 72%. Just last week, oil has fallen 25% after an official announcement that the United States has been in a recession since December 2007.

It is estimated that for gas prices to reach $1, oil prices will need to fall to around $30 a barrel.

If gas prices continue to fall, it won’t be a benefit for that United States Gasoline (UGA), which is down 63% since its Feb. 28 inception.

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