How can I buy shares of oil? I'm told it's done through ETFs. How's that related to oil prices per barrel?
While we're not supposed to make direct recommendations, and I am in no way advising anything, USO an ETF that buys light sweet crude oil futures with the intention of mirroring the price movements of oil. The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day. You can typically sell these futures anytime (if you find someone that buys them), and depending on the direction you bought, you will make or lose money according to oil rice changes - if you have the future to get oil for 50 $, and the market price is 60, this paper is obviously worth 10 $. Note that you will have to sell the future at some day before it runs out, or you get real oil in some harbor somewhere for it, which might not be very useful to you. As most traders don't want really any oil, that might happen automatically or by default, but you need to make sure of that. Note also that worst case you could lose a lot more money than you put in - if you buy a future to deliver oil for 50 $, and the oil price runs, you will have to procure the oil for new price, meaning pay the current price for it. There is no theoretical limit, so depending on what you trade, you could lose ten times or a thousand times what you invested. [I worded that without technical lingo so it is clear for beginners - this is the concept, not the full technical explanation]
Your question is a moving target. And my answer will be subject to revision. I disagree with the votes to close, as you are asking (imho) what role commodities and specifically oil, play in one's asset allocation. Right? How much may be opinion, but there's a place to ask if.  I'm looking at this chart, and thinking, long term, the real return is zero. The discussion regarding gold has been pretty exhausted. For oil, it's not tough to make the case that it will fluctuate, but long term, there's no compelling reason to believe its price will rise any faster than inflation over the really long term. "This is the best tl;dr I could make, [original](https://medium.com/@sethmiller_59231/this-is-how-big-oil-will-die-38b843bd4fe0) reduced by 91%. (I'm a bot) ***** &gt; Oil fuels the most politically volatile regions in the world, yet we&amp;#039;ve decided to send military aid to unstable and untrustworthy dictators, because their oil is critical to our own security.  &gt; Big Oil will be cut down in the next decade by a combination of smartphone apps, long-life batteries, and simpler gearing.  &gt; To understand why Big Oil is in far weaker a position than anyone realizes, let&amp;#039;s take a closer look at the lynchpin of oil&amp;#039;s grip on our lives: the internal combustion engine, and the modern vehicle drivetrain.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6hafjz/autonomous_electric_cars_will_be_the_demise_of/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~144319 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **oil**^#1 **vehicle**^#2 **mile**^#3 **cost**^#4 **year**^#5" I know I'm talking to a bot  Because prices where not allowed to increase the American people continued to drive as if oil was $3 per barrel. But if prices jumped to $6 or $9 a barrel the American people would have changed their behave on driving and started to take the bus and car-pool.  This would allow people who really need the gas to always be able to fill up. "I thought the other answers had some good aspect but also some things that might not be completely correct, so I'll take a shot. As noted by others, there are three different types of entities in your question:  The ETF SPY, the index SPX, and options contracts. First, let's deal with the options contracts.  You can buy options on the ETF SPY or marked to the index SPX.  Either way, options are about the price of the ETF / index at some future date, so the local min and max of the ""underlying"" symbol generally will not coincide with the min and max of the options.  Of course, the closer the expiration date on the option, the more closely the option price tracks its underlying directly.  Beyond the difference in how they are priced, the options market has different liquidity, and so it may not be able to track quick moves in the underlying. (Although there's a reasonably robust market for option on SPY and SPX specifically.) Second, let's ask what forces really make SPY and SPX move together as much as they do.  It's one thing to say ""SPY is tied to SPX,"" but how?  There are several answers to this, but I'll argue that the most important factor is that there's a notion of ""authorized participants"" who are players in the market who can ""create"" shares of SPY at will.  They do this by accumulating stock in the constituent companies and turning them into the market maker.  There's also the corresponding notion of ""redemption"" by which an authorized participant will turn in a share of SPY to get stock in the constituent companies. (See http://www.spdrsmobile.com/content/how-etfs-are-created-and-redeemed and http://www.etf.com/etf-education-center/7540-what-is-the-etf-creationredemption-mechanism.html) Meanwhile, SPX is just computed from the prices of the constituent companies, so it's got no market forces directly on it.  It just reflects what the prices of the companies in the index are doing. (Of course those companies are subject to market forces.) Key point: Creation / redemption is the real driver for keeping the price aligned.  If it gets too far out of line, then it creates an arbitrage opportunity for an authorized participant.  If the price of SPY gets ""too high"" compared to SPX (and therefore the constituent stocks), an authorized participant can simultaneously sell short SPY shares and buy the constituent companies' stocks.  They can then use the redemption process to close their position at no risk.  And vice versa if SPY gets ""too low."" Now that we understand why they move together, why don't they move together perfectly.  To some extent information about fees, slight differences in composition between SPY and SPX over time, etc. do play.  The bigger reasons are probably that (a) there are not a lot of authorized participants, (b) there are a relatively large number of companies represented in SPY, so there's some actual cost and risk involved in trying to quickly buy/sell the full set to capture the theoretical arbitrage that I described, and (c) redemption / creation units only come in pretty big blocks, which complicates the issues under point b. You asked about dividends, so let me comment briefly on that too.  The dividend on SPY is (more or less) passing on the dividends from the constituent companies. (I think - not completely sure - that the market maker deducts its fees from this cash, so it's not a direct pass through.)  But each company pays on its own schedule and SPY does not make a payment every time, so it's holding a corresponding amount of cash between its dividend payments.  This is factored into the price through the creation / redemption process.  I don't know how big of a factor it is though." There is no ETF that closely tracks oil or gasoline. This is because all existing oil and gasoline ETFs hold futures contracts or other derivatives. Storing the oil and gasoline would be prohibitively costly. Futures contracts are prone to contango and backwardation, sometimes resulting in large deviations from the price of the physical commodity. Contrast oil ETFs with metal ETFs, which track nicely. EDIT: See this article about contango. The UNG chart is particularly ugly. The S&P is cap-weighted. So it's not as simple as buying 1 share of each of 500 stocks. (If it were, getting started might be doable, although adding to your position would take time and another large unit of money.) Can you do it? Sure? Do you have enough money to actually do it? I don't know. I'm happy to pay my .02-.03% to not worry about such things. One possibility would be to invest in a crude oil ETF (or maybe technically they're an ETP), which should be easily accessible through any stock trading platform.  In theory, the value of these investments is directly tied to the oil price.  There's a list of such ETFs and some comments here.  But see also here about some of the problems with such things in practice, and some other products aiming to avoid those issues.  Personally I find the idea of putting all my savings into such a vehicle absolutely horrifying; I wouldn't contemplate having more than a small percentage of a much more well diversified portfolio invested in something like that myself, and IMHO it's a completely unsuitable investment for a novice investor.  I strongly suggest you read up on topics like portfolio construction and asset allocation (nice introductory article here and here, although maybe UK oriented; US SEC has some dry info here) before proceeding further and putting your savings at risk. "There are several brokerages which have lower minimum deposits (often $500) and allow purchase of index ETFs. I won't name them to avoid advertising. The best way to find out is to go to your bank, and ask to see a financial advisor. Then explain your difficulty to the advisor (who should caution you about the issues with investing such a small amount) and ask for advice on where to find a suitable broker. Also, sometimes banks offer services where you can buy shares of a fund through your bank account. This is probably not ""as good"" as the brokerage (performance may be not as good, fees may come out higher), but especially for small amounts and for convenience, this may be easier. Again, you should inquire at your institution."