The top chart adjusts nominal oil prices to account for the general rise in prices since 1900 using a measure of the CPI’s broad inflation index. The bottom chart takes a different approach to adjust the oil data. It looks at the hourly wage of a typical manufacturing worker and asks how many hours would a typical worker need to work in order to secure a unit of oil.
(note, I imputed the hourly wages for 1915-1918). Oil data from USGS, CPI data from BLS and wage data from Historical Statistics of the United States and BLS.
Adjusting for the general level of prices, it appears that oil is 50% more expensive today than it was in 1900 (although it is over 20% cheaper than it was when we first started using it in 1859). However, in 1900, it took a typical manufacturing worker 5.6 work hours to secure himself a barrel of oil. Today, a similar worker would only have to work 2.4 hours to get it – a decrease of over 56 percent over the course of the century. Even as oil is playing an increasingly important role in speculative commodities market, as use of oil expands beyond anything anyone ever thought imaginable, oil is certainly no more scarce today than it was 100 years ago. And as I will show you, these are lower bounds for just how scarce oil really has become. Keep in mind that the above data is talking about the viscous black stuff that we find naturally under the ground and does not account for any other type of “oil” that might be used or produced, at least not directly.
But this is just oil, right?