Diesel pricing and the gas price ETF

Thursday, December 11, 2008, 9:25 AM:  For future analyses, I have started to keep track of diesel prices on Lake Michigan Drive and the daily close of the US Gasoline Fund ETF (ticker:  UGA).  For the former, I have been asked questions several times over the past year about diesel prices, and my responses have usually been "I don’t have a clue".  I am starting to work on getting a clue, and what I have seen so far after two weeks of observation is that diesel prices don’t change from day to day like gas prices do.

About the ETF, from Yahoo:  "The investment seeks to track, net of expenses, the changes in percentage terms of the [wholesale] price of gasoline."  In two weeks, wholesale prices have gone from $1.13 to $1.00, and the ETF has gone from $22 to $19.  So, if I think we are going to see $2 retail, I could buy UGA or UGA calls to put my money where my mouth is.  If $1 retail is in the cards, then sell short UGA or buy UGA puts.  Disclaimer:  option and stock trading carries risks, you can lose all your investment, etc…

 

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