Lies, Damned Lies and Statistics

By: Jake Jakubuwski

Copyright, 2012.

All rights reserved.

 Right at forty years ago (39 to be exact), I was running a carpet cleaning company with six trucks, a furniture van, a car for my estimator and my own personal vehicles.

Then, the infamous Oil Embargo sank its teeth into the World’s economy!

The Oil Embargo culminated in a different game plan when it came to the pumping, delivery, refining and selling of oil-based products and chemicals from gasoline to plastics and roofing shingles. A lot of those changes were still in the future but were definitely coming our way.

Our immediate concerns in 1973-74 were with long lines at gas stations, limits on how much gas you could buy and concerns about the possibility of radically escalating prices for gas, heating oil and a host of other ancillary products. An ever growing list of “stuff” which was dependent — in one way or the other — on a readily available, economical, and uninterrupted supply of oil.

Stuff like groceries, medical supplies, fertilizer, manufactured goods and retail merchandise of all sorts, sizes, shapes and forms.

At the time, my primary concern was how to find and buy enough fuel to keep my small fleet of vehicles running and my business operating. My “partner” and I were discussing the problem one morning over our usual cup of coffee and I said: “Glen, it doesn’t matter if gas goes to five bucks a gallon as long as we can get it!” My thinking, at the time, was the costs would, one way or another, be passed on to our customers.

At the time, gasoline was costing me about thirty cents a gallon. It quickly went up to forty cents and higher as the year progressed and supplies tightened.

By 1975 the Oil Embargo was over and gasoline prices settled in at somewhere around $0.58 a gallon. Oh, for the Good Old Days, right 

By 1988, the year we moved toOxford,NC, gas was hovering between ninety cents and a dollar a gallon.

In April of 2001, I wrote an Op-ed piece for the News & Observer where I was discussing the price of gas going to $1.40 a gallon. That piece was inspired by an earlier article written by an economics professor at UNC who said that when you factored in inflation, we were actually paying less for gasoline then we were fifteen years earlier.

I really get my shorts in a knot when folks start telling me how much better off I am today when you  consider the effects of inflation. It’s not, in my opinion, that the goods cost more (Inflation), it’s the fact that my dollar is worth less (Currency depreciation). Ah, that’s a whole ‘nother story.

I’m probably being unreasonable, but I tend to agree with Mark Twain. He said there were three types of lies; “Lies, damned lies and statistics!”

So, when it comes to comparing how well off I am today compared to how well off I was ten, twenty, thirty or even forty years ago; I think that simple statistical comparisons fall far short of the mark. Er, excuse me, Mark, I didn’t intend that as a pun.

I mean, I remember nickel candy bars, twelve cent-a-pack cigarettes and Saturdays when I would be hard pressed to spend a buck on movies, candy, ice cream sodas and hot dogs. That is, if I had a whole dollar to spend.

Anyway, here’s just one thing I had to say to the prof at UNC:

“The fallacy lies in statistical averaging. If I make $7.00 an hour and you make $21.00 an hour, we average $14.00 an hour each. And, by golly, gasoline at a dollar-forty-cents-a gallon only represents ten percent of our average hourly wage!

Factually, the cost of a gallon of gas represents 20% of my wage rate and only 6.66% of yours! For the wage earner making less then $7.00 an hour, the cost-per-gallon of gasoline is, when measured against their wage rate, even higher — and more onerous.”

Fast forward to 2012!

Last night, I heard on the news that gasoline “could” reach $4.50 a gallon by summer. Most folks seem to believe that we’re headed for $5.00 a gallon over the next several months, late this year or early next year.

One precept that I refuse to consider is that “in reality”, I’m in no worse shape regarding how much a gallon of gas cost today if I compare it, statistically, to the prices of 1955. 

Because I know this for a fact:

In 1955 I had my first “hourly” job and made sixty cents and hour. Cokes cost me a nickel each. That meant, to my way of thinking, that it took me five minutes of labor to earn a Coke. Today, if I were at an entry level job and making $7.45 an hour, and a 16 oz. bottle of Coke sells for $1.58 (Local WalMart pricing at check out) it will take me about 12.65 minutes to earn a Coke.

That means, at least the way I see it, that at an entry level job today earning over ten times what I earned per hour in 1955, it will take me more then 12 minutes of work to earn enough to buy what I could have bought in 1955 for only five minutes work!

Even if you consider that the Coke in 1955 was in an 8 oz. bottle and today’s Coke comes in a 16.oz bottle, I would still have to work six minutes today to earn a coke. That, I believe, is called wage compression. It means that I’m making more but it’s buying me less. Those are statistics that I understand.

In ’55 Pepsi came in a 12 oz. bottle for a nickel. That makes today’s Pepsi an even worse buy then a Coke!

In the final analysis,  here’s the way I see it. We’re getting slammed everyday with higher fuel prices, which, in turn, cause our tacos, Big Macs, Whoppers and peanut butter cost more because it costs more to deliver those things to the stores where we buy them. Even Coke and Pepsi.