[PRCo] Inflation

[Fred Schneider]

In the Shuman slides I came across a color slide of a Pittsburgh  
Railways route 60 trolley car passing a gasoline station in Homestead  
in 1958, almost 50 years ago.   The price at the pump for regular was  
29.9.   If we work with the idea that inflation  normally moves the  
decimal one place in fifty years, that would jack it up to $2.99  
9/10s today.   Add a little more for the added costs of unleaded and  
perhaps $3.10 or $3.20 is reasonable ... we're right in the ball  
park, aren't we?   (Understand that I'm not even considering using  
the consumer price index in my thought process because it is adjusted  
to consumption and doesn't reflect raw inflation.)

But very little of the liquid fossil fuels we burn are pumped out of  
the ground in the U. S.  What stuns me is that we are buying foreign  
oil in dollars and the U. S. dollar has gone to hell in a hand basket  
thanks to our borrowing to run our government, borrowing to give tax  
refunds, the collapse of our mortgage market, etc.   It is worth  
about 59% of what it was against the Euro just ten years ago.   We've  
lost about 20% against the Canadian dollar in the last year and they  
are the largest source of oil in North America.

The independent truckers want to strike because the price of fuel is  
up but all I can see is something far less than normal inflation.    
If we adjust that inflation to the loss in the value of the dollar,  
then our gallon of gasoline should be somewhere between $3.84 and  
$5.12 a gallon depending on where we buy the crude oil and No. 2  
diesel, which is taxed to a greater degree, should be about 25 cents  
a gallon more.

Somebody want to tell me what I'm not seeing?   Was there a lot of  
markup in the price of fuel 50 years ago that isn't there today?    
Have the oil company's sacrificed investment to keep the price at the  
pump low?

fws