The Value of Petroleum Fuels

By Andy May

It is difficult to compare 1840 to 2015, so much of what we have today didn’t exist then.  But, they had to move people and goods from place to place as we do now.  They had farms then as we do now. They used wagons pulled by horses, mules or oxen.  We use cars and airplanes. They used muscle power to farm, we use tractors, combines, grain carts, and trucks powered by petroleum fuels. In 1840 crude oil and natural gas production and use were rare. Coal was used in manufacturing, but steam engines were still in their infancy. So the world in 1840 was fossil fuel free for the most part. Biofuels, that is burning wood and dung, were common.  Wind power and hydro-power have been around for thousands of years.  But, windmills suitable for pumping water on small American farms would not appear until 1854. Practical hydropower was not in common use until after 1849.

The cost of gasoline can be seen on the sign at any gas station, but what is its value?  Using gasoline or diesel saves us time and manual labor. It also saves air, water and waste pollution. Let us not forget that the automobile was lauded as a great environmental improvement after the “Great Horse Manure Crisis” of 1894. Nothing like having horse manure up to your knees to help you appreciate gasoline!

How much manual labor is replaced when we use gasoline? In other words what is the value of gasoline? In large part our standard of living is determined by the difference between what we pay for petroleum fuels and coal and their value in time and labor. I’ll try and compute that value by comparing a 1,812 mile trip, along the Oregon Trail from Independence, Missouri to Oregon City in 1840 with a trip today. I’ll also compute the value of diesel by comparing a 10 acre grain harvest in 1840 to a harvest today.

In 1840 to make the 1,812 mile trip, most people used Prairie Schooner wagons pulled by six oxen.  Oxen were cheaper than horses or mules and could survive on lower quality grass.  The total cost of an equipped Prairie Schooner with Oxen was around $1,000 in 1840 money, the equivalent of $23,373 today.  The normal time to make the trip was 4.5 months or 137 days.  Fuel for the Oxen was free.

Today we have two choices for the trip.  We could drive a car for $1,052 using the IRS business car reimbursement of $0.575 or fly a family of four for $1016.  The driving time would be two days.  Fuel would be about 72 gallons at $144.  Using these figures and considering the 135 extra days in 1840 at today’s minimum wage of $7.25, the value of the gasoline is $411 per gallon for the driving case. A family of four flying in a Boeing 757 will use 92 gallons of jet fuel according to wikipedia, so the value per gallon of the jet fuel is $329. But, the trip is much quicker and easier than driving.

Figure 1: The trip today

Figure 2: The trip in 1840

But, traveling isn’t the only thing that has improved since 1840 due to the invention of gasoline and the internal combustion engine.  Farming is much more efficient.  In 1840 nearly everyone was employed in the agricultural industry or supported it in some fashion.  Now only a small portion of our population is engaged in farming.  According to the USDA farm workers are only 1% of US workers.

In order to harvest 10 acres of grain in 1840, it took 130 men working all day.  The average wage in 2015 for farm workers in the US is $12.27, this is a total cost of $12,761 in 2015 dollars to harvest 10 acres in one day.  In 2015 40 skilled farm workers can harvest 450 acres in one day.  Farms are larger today and much more efficient, so we need to scale down to 10 acres to do a valid comparison. On a large modern farm, the cost of the men required, a combine, grain cart and truck to harvest 10 acres sums to $561. The total diesel and lubricant required comes to 23 gallons. This results in a value of $530 per gallon of diesel. So, generally we are paying about $2 per gallon for fuels that are worth over 100 times that, a pretty good deal. The details of the calculations described in this post can be found, along with more references, here.

This post was updated December 24 to reflect some corrections to the farming numbers by my friend the petrophysicist and gentleman farmer Brian Stambaugh.

December 23, 2015

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