Occasionally different indexes of the same commodities give different results. The chart compares different methods for measuring the movement of fuel prices. These indexes, based on the movement of prices weighted by 1954 outputs and by 1902 outputs, as well as on the average cost per energy unit (Btu) of fuel produced, are shown in this chart. It will be noted that the cost of mineral fuels per contained energy unit rose more than either of the other indexes. This is because energy has been produced to an increasing degree in the form of fuels of higher quality, representing more convenience and economy to the consumer. (For example, it has been estimated that diesel engines require 1/7 as much energy per ton-mile of freight hauled as do coal-steam engines, and much less maintenance, labor, etc.; gas furnaces average 30 percent more efficiency than coal furnaces.) Thus in 1870, only 3 percent of the mineral energy output was in the form of oil; by 1957 38 percent was. Since the cost per Btu in 1957 of energy contained in oil was nearly three times the cost of that contained in bituminous coal, this shift in the proportions of output of the different fuels accounts for a major portion of the rise in the energy-cost index. The fixed-weight price indexes are better indicators of the changes in the cost of mineral fuels over the period. The 1954-weighted index is an indicator of the costs which would have been borne by an economy using the mineral fuels in 1954 proportions, with petroleum predominating; the 1902-weighted index shows the rising costs which would be borne by an economy using the mineral fuels in the proportions of 1902, with coal dominant. Both exclude the effect of the shift to more expensive fuel. All three indexes are "deflated"; that is, they have been adjusted to compensate for changes in the general price level and thus show relative prices on a consistent long-term basis.
From the introduction to Trends in Natural Resource Commodities, by Neal Potter and Francis T. Christy, Jr. This RFF book presents on a continuous uniform basis statistics of prices, output, consumption, foreign trade, and employment in the United States from 1870 to 1957.
A version of this article appeared in print in the September 1962 issue of Resources magazine.
