Most people are amazed to discover the enormous amount of energy contained in a gallon of gasoline. However, this isn’t surprising because the public seems to take for granted the ENERGY that drives the entire economy, especially oil. And, oil is the most crucial energy supply vital for our Just-In-Time-Inventory-Supply-Chain System. Without oil, the entire global economy would grind to a halt.
In my recent video, The Tremendous Hidden Value In Every Silver Coin, I discussed why the precious metals act as a store of “Energy Equivalent Value.” While many people may disagree with this analysis, our complex economy is nothing more than the trading of energy, in one form (goods) or another (services).
Here’s an example. Skechers USA, which sells footwear, enjoyed a 7% margin of profit in the first three quarters of 2019. The company reported $287 million of net income on $3,889 in revenues. Thus, the total cost of Skecher’s footwear was 93%. While the public is purchasing shoes made by Skechers, I can assure you that the overwhelming majority of the cost was associated with the ENERGY consumed in the entire process. Energy also includes the amount of Human Labor, Materials, Capital Expenditure, etc. Why? Because the materials used in Skecher’s shoes were a result of the tremendous amount of energy in all forms and stages in the manufacture of the materials.
So, when someone plops down $75 to purchase a pair of shoes, the overwhelming majority of that price is a result of all the ENERGY consumed in all forms and all stages. Thus, our ECONOMY is nothing more than the trading of energy… that ends up in one form (goods) or another (services).
Unfortunately, the public just sees a pair of shoes but doesn’t consider all the energy that went into making the materials, shipping the materials to the manufacturing center, shipping the shoes to warehouses in the United States and then shipping the millions of shoes to the thousands of stores that consume one hell of a lot of energy in the entire Retail Shoe Chain.
The Economy is nothing more than the TRADING OF ENERGY… in one form (goods) or another (services).
One Gallon Of Gasoline = 450 Human Hours Labor
After I published the video linked above, many people questioned the amount of human labor in a gallon of gasoline. So, I decided to set the record straight and provide proof based on scientific and engineering data.
According to the data in the Marks’ Standard Handbook For Mechanical Engineers (Edition 11), human labor equals approximately 1/1oth horsepower or 0.1 hp. Furthermore, the data shows this 0.1 hp. also equals 75 watts.
The 75-watt figure for human labor is also confirmed by the conversion of “Horsepower to Watts” calculated on the website, Rapidtables.com, inserted in the chart below:
1 Horsepower equals 746 watts. Thus, if human labor is one-tenth horsepower, then it would be approximately 75 watts. One of my followers published a comment showing that a gallon of gasoline contains 33,410 watt-hours of electricity. Doing the conversion of gasoline to watt-hours on several websites, I found the same figure. If we divide 33,410 watt-hours by 75 watts, it equals 445 hours of human labor. I stated in the video above that a gallon of gasoline equaled approximately 500 hours of human labor. This calculation is not that far off from my original figure.
Now, here is another method that provides a similar result. If we convert a gallon of gasoline to BTUs, it equals the energy equivalent of 114,000 BTUs:
Then, if we convert 0.1 Horsepower to BTU’s, here is the result:
1 Horsepower equals 2,544 BTU per hour; thus, the human labor equivalent (0.1 hp) would be 254 BTU per hour. If we divide 114,000 BTUs from one gallon of gasoline by 254 BTUs (one-hour human labor), it would equal 449 hours of human work:
It would take the human labor of 449 hours to equal the energy contained in one gallon of gasoline. Again, people don’t realize the enormous energy contained in oil and its petroleum products.
So, there is a range of 445-449 hours of human labor to one gallon of gasoline in these two examples. While I stated in the video above that one gallon of gasoline equaled 500 hours of human work, I was pretty darn close. And depending on the type of labor, we can say 450-500 hours of human labor does equal the energy contained in one gallon of gasoline.
Additionally, the chart below shows various machines “horsepower ratings.”
The Ford Escort (older 4-cylinder car) shows a horsepower rating of 110 HP. Thus, the Ford Escort has 100+ times the power of a horse and 1,000+ times the power of the typical human being. Moreover, a Ford Escort will get about 30+ miles per gallon on the highway. Just imagine how long it would take an ordinary individual to push that Ford Escort 30 miles. I doubt they could do it before experiencing severe muscle cramps and projectile vomiting.
Lastly, the world was bestowed with billions of barrels of condensed energy in the form of oil. This oil energy has allowed us to grow our population and economy to the level it is today. Without oil, likely 6+ billion of the current population would not be possible.
The precious metals have been money for thousands of years because they are a store of value or store of “Energy Equivalent Value.” An economy, whether it was two thousand years ago or today, was based on energy and or human labor. Without ENERGY, there is no economy. Without energy, there is no mining of metals or materials. Without energy, there is no manufacturing. Without energy, there is no transportation.
I could go on and on. However, the most important factor that investors need to understand is that ENERGY is the driver of the global economy. Fiat Money represents ENERGY DEBTS or ENERGY IOUs, while Gold and Silver equal BANKS of Energy Equivalent Value.
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