The Effects of Light Crude Oil Costs and Stock Prices on Five Class I Railroads
I chose this study to determine if there was any significant effect on the relationship between the cost of (Brent) light, sweet crude oil, the largest type of oil in volume traded, and the stock prices of five Class I Railroad stocks operating in the United States. I am currently employed with the Brotherhood of Locomotive Engineers & Trainmen, the bargaining agent for the majority of engineers on the major Class I Railroads in the U. S. During the recent contract negotiations one of the important issues for labor's position in bargaining for wage increases, along with keeping the health & welfare contributions to a minimum, was the argument that the Class I Railroads have been making record profits and it would be fair and equitable to share some of that wealth with the men and women who actually do the work. I wanted to see if the numbers supported that conclusion.
In 1981, when the Staggers Act became law, the railroads were no longer regulated for commerce purposes. They no longer needed the Interstate Commerce Commissions approval for rate increases. This change in law allowed the railroads to take the position that they were now in a competitive market place. Based on recent financial reporting, three of the five railroads that I chose have broken their first quarter earnings records in 2007 by as much as 4% (Brotherhood of Locomotive Engineers & Trainmen News, June/July 2007, pg. 3).
This change in law has also resulted in the "cost neutral" (concessionary bargaining) that has taken place up until the latest agreement. Prior to this agreement the carriers demanded and were successful in getting work rule ...