They proved it worked in '76. Then buried it. 
4 Oil and Gas ETF Plays as Prices Stay Sky-High
Written by Nathan Reiff on August 6, 2026
Key Points
- Persistently high oil and gas prices, driven by war in Iran, low petroleum reserves, and refinery shortages, have created varied opportunities across energy ETFs.
- Commodity-based funds like UGA and USOY have posted strong gains and yields this year, but carry risks from futures contango, leverage, or niche options strategies.
- Equity-focused funds such as PXJ and leveraged products like OILU offer alternative ways to target oil and gas exposure, ranging from buy-and-hold to short-term trading strategies.
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After six months of war in Iran and a long series of mixed signals about when the conflict would end, the oil market appears to be shrugging off some of its usual price movement factors. At the same time, with the U.S. Petroleum Reserve at its lowest level in decades and a shortage in refinery capacity, there are plenty of reasons investors might expect oil and gas prices to stay high for the foreseeable future, even as the Trump administration will likely try to pull them back down in the lead-up to November's midterm elections.
The oil and gas industry is far from a monolith, though, and just because crude or gasoline prices are high does not mean that any investment in the space is equal. Refineries have seen major boosts, for example, as crack spreads have reached record levels. To gain the widest possible access to the industry, investors may turn to exchange-traded funds (ETFs), but even then, there are plenty of options to choose from, with a variety of approaches.
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One of the most basic ways of accessing the energy sector is through a commodity fund focused on crude oil or gas. The United States Gasoline Fund (NYSEARCA: UGA) is just that: it charges investors an annual fee of 1.08% to participate in a commodity pool that holds gasoline futures contracts to mimic daily gasoline price movements.
With average gasoline prices nationwide as of late July approaching a full dollar per gallon higher than they were a year ago, UGA has similarly shot upward. The fund has returned about 80% year to date (YTD).
Still, there are considerations for investors seeking to benefit from rising pump prices. First of all, UGA's use of futures makes it subject to the risk of contango, so the fund's greatest appeal may be for those looking to invest for a shorter period. The fund's average trading volume, however, does not support highly liquid trading. Further, the price of gasoline is not a proxy for the overall crude oil market, nor is it guaranteed to match the spot price of gasoline due to the futures market's structure. Despite the fund's significant gains this year, these risks may dissuade some investors.
A Layered Options Play on an Oil Commodity Fund
The Defiance Oil Enhanced Options Income ETF (NASDAQ: USOY) can be seen as a variation on a commodity fund like UGA above, although in this case, the ETF uses an oil fund as its foundation rather than a gasoline one. With a high price tag—an annual fee of 1.12%—USOY provides indirect exposure to the United States Oil Fund LP (NYSEARCA: USO) while also using at-the-money put selling to provide income.
An options strategy layered on top of a commodity fund in this way adds levels of complication and risk, but USOY has delivered on its distribution goals, if not necessarily on share price appreciation this year. The fund's dividend yield of 61% has provided excellent income, although the USOY remains highly niche and has a very modest asset base.
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Those willing to take on an even greater degree of risk might look to a fund like the MicroSectors Oil & Gas Exp. & Prod. 3x Leveraged ETN (NYSEARCA: OILU). OILU takes the common energy ETF approach of targeting large companies engaged in oil and gas exploration and production as a proxy for crude oil prices, but it then adds aggressive leverage to compound returns, either positively or negatively.
Any leveraged fund requires caution, and a 3x fund in particular can amplify returns in a highly risky way for investors unprepared for this gamble. Like all leveraged funds, OILU is designed for short-term trading only and serves as a tactical tool to help investors maximize performance when they believe oil and gas production firms' share prices will rise in a single day.
Even as the seesawing between ceasefire negotiations and renewed fighting in Iran has fatigued the market, there is still potential for geopolitical updates to sway these prices, so investors willing to chance timing these developments may still be able to notch some wins here.
A Traditional Equities Approach With a Niche Sub-Industry Strategy
For many investors, a standard equities-focused fund still feels like the most secure bet. The Invesco Oil & Gas Services ETF (NYSEARCA: PXJ) focuses on around 30 U.S. companies in the oil and gas production, processing, and distribution business. Similar in approach to OILU but without the leveraged component, PXJ may be the fund on this list that is most likely to appeal to buy-and-hold investors.
Still, the ETF's focus on oil and gas services companies leaves out some of the biggest players in the energy sector and makes it a more narrowly targeted strategy. Its value, then, is maximized for investors expecting bottlenecks in the energy services sub-industry as the broader sector seeks to adapt to shifting conditions. For an annual fee of 0.63%, this fund has returned a healthy 47% YTD.
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