WATCH DIESEL FUEL PRICES.

WATCH DIESEL FUEL PRICES.

Every day we hear a different analysis of our economy and the world regarding when we will be out of this stubborn recession. Experts each have their ideas and give us all the economic models they have to predict the recovery.

I was on my 8 mile walk one Sunday morning at our neighborhood park. The park I walk at is on top of a very high hill. One section of the park has a total view of the freeway from above. On this particular Sunday, the weather was so great that I stopped to watch the traffic moving on the freeway. What caught my eyes was the number of the trucks on the road going both directions on the Santa Ana freeway, a major freeway called the “5”. I remembered from my college days in the economics class when we were told “Mobility is Prosperity”. Many trucks were moving down there, and I remembered that what drives prices is demand. What do trucks use to move? Diesel Fuel!

As soon as I got home I went on the internet and looked at the price history of the diesel fuel. Look at the chart below. From April 2007 when our economy was expanding and goods were moving, trucks were moving, using diesel fuel. The prices were rising due to the high demand, up until August 2008 just when we had reached the height of the growth and just before the Prime Loan CRASH. Then, as the chart shows, the prices plummeted because goods stopped moving via the trucks. As a result, prices that had reached $4.80 per gallon of diesel fuel took a steep nose-dive to $2.00 per gallon, indicating a 59% price drop, reflecting the recession that is affecting us all.

Now step forward to May 2009 and see the chart showing prices that are moving steadily up from the low of $2.00 to $2.60. Prices are moving up and that should be an indication that we are moving toward recovery slowly but surely. It is not going to be an overnight happening, but slow is good.

Who needs economists to tell us what the economy is doing. On your way to work every day as you pass the gas station, check out the diesel fuel prices on display. You have your own economic gauge of what is happening and how things are getting better. As the diesel fuel prices rise, more goods are being shipped. That means prosperity is back via mobility and the recession is retiring. Now I have my own economic gauge and can check it out on my morning drive.