Heavy Lifting - thoughts and web finds by an economist
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Wednesday, August 24, 2005
Okay, perhaps not a millionaire. However, the Aug. 24, 1905 NYT, reports on one Charles Haggstrom of Warren, Pennsylvania, who drilled a well to provide water for his bathroom. Water was eventually replaced with oil. Says the report (from Page 7):
The pipe has only to be driven about 15 feet into the ground to get the oil. The oil sells for $1.42, the refineries newar at hand furnishing the barrels free.
Hmmm. $1.42 per barrel. The story reports Chuck having collected about 159 barrels to date. That's about $225. Not too shabby. According to Economics History Services, $1.42 in 1905 had the following values in 2003:
In 2003, $1.42 from 1905 is worth:
$29.48 using the Consumer Price Index
$24.92 using the GDP deflator
$136.05 using the unskilled wage
$171.83 using the GDP per capita
$595.54 using the relative share of GDP
So, let's go with the GDP deflated value. The price of crude oil was considerably less in 1905 for a few reasons. First, the demand for crude oil was much lower than it is today. The marginal costs of extracting crude oil were obviously much lower, as Chuck was barreling oil from his bathtub. Chuck likely wasn't getting rich off his oil find, but I am sure it helped pad his savings account a little.
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