Comment on last week’s prediction: On Thursday, prices rose almost everywhere in town to $2.25. Very CORRECT!
Tuesday, October 10, 9:30 AM: The situation is the same with the NYMEX numbers, so I am predicting that prices re-set to $2.25 again by the end of the day on Thursday. Meanwhile, I came across a theory this morning on Minyanville.com as to why gas prices fell so much in August and September. As they are fazing out the HU contract on NYMEX in favor of the RBOB contract, Goldman Sachs is adjusting its Commodity Index. It has lowered its weighting of gasoline in the index from 7.3% to 2.5%. As the Minyanville article states, “This forced billions of institutional dollars ‘mirroring’ the GSCI to sell gasoline [NYMEX] futures.” This does not seem far-fetched to me, as index investing is quite popular, and the main thesis of The Gas Game is that gasoline prices are controlled by the futures markets.