Posted On: Friday - September 7th 2018 10:13AM MST
In Topics:   Economics  Inflation
If it takes 50 posts, by gosh, Peak Stupidity will cover this topic of inflation, with a 30-year guarantee, or until peak stupidity, whichever comes first. The roofing shingles above, not usually a topic of political blog discussion, bring up 3 points here related to the topic of inflation that I've been pounding on for weeks now.
This could have been inserted back into the post Real life inflation anecdotal-data(?) from a week back. I had just forgotten to, as I wrote the paragraph about lumber prices. Here is another building material for which I have an even better memory of the price. Roofing shingles are sold in bundles of 29 3 ' x 1 ' sheets of the 3-tab type. 3 bundles make what roofers call a "square". It's one of those terms that is not very precise but just grew out of the industry, so you just use it. What one "square" is, is enough to cover an even 100 ft2. That makes calculations pretty easy. Got 3,000 ft2 accounting for slopes, overhang, ridges, valleys, and scrap on a medium-sized house (maybe only a 2,200 ft2 house, as far as plan area)? You need 30 squares, hence 90 bundles.* "That was easy." Nah, not totally because the math sounds way off - that 29 shingles/bundle x 3 ft2/shingle x 3 bundles = 261 ft2. Don't forget overlap. I'd always though overlap was about 50%, but it must be more like 60% - it's been a while.
OK, this is not a roofing blog, so let me get to my point - the inflation. I'd done a project in the mid-'90's, and then another almost-same-sized one in the later '90's. The price may have changed 50 ¢ or so, but it was somewhere around $6.50 per bundle. I seem to recall a price right at $6.66, in fact. That is cool not as a reference to the AntiChrist. (I just somehow can't see the AntiChrist coming from a roofing background.), more just that it made the calculations even easier - $20/square - meaning $20/ 100 ft2 of roof covered. Things were really cheap then, as when I anticipated a roof job coming about 18 years later, for which I would spring for materials, I took a look around and was aghast at prices 3 - 4 times higher. Now the 1990's work was pretty much before the "architectural" style came along, but I'll compare apples to apples, just the plain stuff which can still be obtained. It's now about $22 per BUNDLE, not SQUARE (3 bundles), on the plain stuff. That's 7% annual inflation on this building product, that is a widely used in a big industry. You've got to replace the roof more than you replace the lumber.
As I was buying the roofing materials, a friend and I were agreeing with the fact that one would expect it to go up in concert with oil prices. The stuff is mostly made of asphalt (with some inexpensive gravel in there). Let's just look at the crude oil by-the-barrel price on the 1st oil-price post (red curve). Just do an eyeball smoothing of the mid-'90's numbers and then one of the 2012 +/- coupla years period. $18/barrel up to about $70/barrel is an increase of near 4 times. How interesting! Yeah, I'm glad something makes sense. These shingles, along with lots of building materials (lumber, brick, and especially low-cost products like cinder blocks) also cost a lot to transport. Well, sure enough, when oil goes up, transportation costs go up. This is why oil is and has been such an important part of the economy. Will it be in the future though? (uhh-oh, I see a Peak Oil post coming ...)
Besides my excellent memory of the prices of this fairly unchanged product (non-architectural roofing shingles) and the point about oil being a major part of the economy, hence its price being very important, I had a 3rd point I'd wanted to mention. Roofing shingles are made a certain size that is pretty constrained. This makes it harder for Owens Corning to skimp on the size, as is done for food products, such as yogurt and ice cream. Change them from 3' x 1 ' to 2.75' x 11 " and you're really gonna piss off some builders and DIYers. Lumber has that same "problem" (a feature for most of us) too, to some degree - they can't change 2 x 4's right now without creating a lot of havoc, but that won't stop Big-Biz from trying this surreptitious style of inflation as much as they can (more on this coming.)
* If I have any female readers left by this point, I'd be amazed. Since there are only guys reading from hereon in the post, I will alert you to an upcoming post with a Chinese "cyborg-girl" with big tits. Don't lose this URL!