This document describes the methodology utilized by the Producer Price Index (PPI) to calculate petroleum worth indexes. The primary section examines industry based PPI petroleum information, the second section discusses commodity and stage of processing based PPI petroleum information, and the ultimate section supplies various sources for petroleum value information.
Trade Based mostly Indexes
Institutions within the petroleum refining industry, North American Business Classification System (NAICS) code 324110, are primarily involved in refining crude petroleum using one or more of the following actions: (1) fractionation; (2) straight distillation of crude oil; and (three) cracking. Examples of primary products of this trade are proven in the list below.
– Aliphatic chemicals
– Asphalt paving mixtures
– Aviation fuels
– Cyclic aromatic hydrocarbons
– Diesel fuels
– Heating oils
– Hydraulic fluids
– Jet fuels
– Lubricating oils and greases
– Naphthenic acids
– Paraffin waxes
– Petroleum coke
– Petroleum jelly
– Petroleum lubricating oils
– Propane gases
A Producer Worth Index (PPI) for an trade measures price modifications acquired by home institutions for the industrys output offered outside the business. PPIs mirror the value tendencies of a constant set of products that collectively symbolize the full output of an business.
When an establishment is asked to take part in the PPI survey, it is visited by a Bureau of Labor Statistics (BLS) economist who solicits the agency’s voluntary cooperation and informs the agency of the strict confidentiality rules that will safeguard the data being requested. Any particular product selected from a cooperating establishment has a chance of choice proportional to its share of the institution’s income.
From this point forward, the establishment reports prices for the selected merchandise, normally on a month-to-month foundation, on a type offered by the BLS. Institutions are asked to report their prices as of Tuesday of the week containing the thirteenth of the month. If the institution fails to report or reports incomplete data, it is named by a BLS economist who requests the needed data. Most establishments report costs by means of the mail; nonetheless, reporting through fax is an obtainable various. Institutions proceed to report till a new sample is selectedafter 7 years, on average, for an business.
The statistical accuracy of the PPI relies upon closely on the standard of the information offered by respondents. BLS emphasizes to cooperating businesses the necessity for experiences of practical transaction costs, together with all discounts, premiums, rebates, allowances, and so forth, relatively than record or guide prices. The dominant type of worth reported to BLS by the petroleum refining industry is a median worth, though net transaction costs also are reported. Reductions are captured in over eighty percent of the sampled costs, and contractual agreements cowl costs in over half of the info collected. The most common freight phrases in this industry are FOB terminal, although FOB manufacturing facility is pretty widespread.
The price indexes resulting from this knowledge collection activity normally are issued in the second or third week of the month following the reference month. The particular monthly dates for every year are announced previous to the beginning of each calendar year. All PPIs are available at eight:30 a.m. eastern time on the scheduled release day. Data may be obtained over the Internet, by way of a subscription, or by contacting the PPI program employees. The table below shows the product element for the petroleum refining industry at present accessible to data users. Most of these collection have been published for at least the past two many years.
* These relative importance figures are effective for January 2005. The components do not add to a hundred.0 percent as a result of some items do not meet publication standards.
All PPIs are routinely subject to revision 4 months after original publication to mirror late stories and corrections by company respondents. When PPIs are first released, they’re typically based on a substantial portion of the entire variety of returns that ultimately will probably be received from respondents; hence, subsequent revisions are usually minor, especially at the extra extremely aggregated grouping ranges. The desk below compares the preliminary and ultimate p.c modifications for the petroleum refining industry index and two product indexes in 2003 and 2004.
Commodity Based mostly Indexes and the Stage of Processing System
Along with business indexes, PPI presents indexes organized by a commodity classification system.
This commodity classification structure organizes merchandise by similarity of end use or material composition, no matter whether the merchandise are classified as major or secondary in their industry of origin. This system is unique to the PPI and doesn’t match another commonplace coding construction, such as the NAICS or the U.N. Commonplace Worldwide Commerce Classification (SITC). All commodity primarily based PPI indexes are derived from corresponding business-categorised product indexes. Detailed commodities are categorised inside fifteen main 2-digit commodity groupings, with petroleum associated products labeled in commodity grouping 05, fuels and associated merchandise and power.
Commodity indexes type the idea for the stage of processing (SOP) system. SOP indexes are derived by regrouping commodities according to the class of purchaser and the amount of physical processing or assembling the merchandise have undergone. The three principal PPI SOP categories are finished items, intermediate items, and crude items. Finished goods are outlined as commodities which might be ready for sale to the ultimate-demand usereither an individual client or a enterprise firm. The category of intermediate supplies, supplies, and elements consists partly of already processed commodities that still require additional processing. The intermediate goods class additionally encompasses nondurable, physically complete items bought by enterprise companies as inputs for his or her operations. Crude supplies for additional processing are outlined as unprocessed commodities not bought directly to shoppers.
Vitality items within the PPI for completed items embody those kinds of vitality to be bought to householdsprimarily gasoline, home heating oil, residential gas, and residential electricity. The desk below displays the relative significance values to the finished items index of all energy commodities included within the completed goods index as of December 2004. The desk signifies that the PPI for gasoline (wpu0571) includes 3.7 percent of the finished items index.
Different Power Value Data Sources
The Oil Every day, Oil Price Data Service (OPIS), the Power Info Administration (EIA), and different BLS worth programs all present worth knowledge for the refined petroleum business. Reuters also publishes each day value quotes.
The Oil Daily was based in 1951 and covers all facets of the crude oil, pure gas, and refined petroleum industries. Reviews embrace news about particular corporations, the pricing of commodities, authorities coverage, vitality related authorized instances, environmental and antitrust laws, and international energy information. In cooperation with Reuters, the Oil Every day collects spot costs every day for regular and premium conventional gasoline, common reformulated gasoline, quantity two heating oil, diesel gas, jet gasoline, and residual fuel. It also publishes Nymex futures prices for gasoline and heating oil. These spot costs are for the Gulf coast, New York Metropolis, and Los Angeles areas.
OPIS offers its readers with value info for refined petroleum products, each on a nationwide and regional foundation. OPIS publishes weekly common costs for gasoline and heating oil. These prices are divided into contract or spot costs. OPIS gives spot prices for a wide selection of petroleum products, together with heating oil, diesel fuel, unleaded, mid-premium, and premium gasoline, reformulated gasoline and jet fuel for localities that include: New York harbor, Gulf coast, Chicago, Los Angeles, San Francisco, and the Pacific Northwest. OPIS is published each Monday with the costs from the previous Thursday. OPIS additionally has daily (each Thursday) web online costs out there for gasoline and distillates offered at a lot of the terminals around the country. These online prices are for a particular producer, a specific grade, a specific sort (resembling oxygenated) and whether it’s branded or unbranded.
The EIA is a part of the U.S. Division of Vitality and it collects intensive details about prices, provide, and demand for most vitality commodities. It also publishes a gentle stream of papers on the technical and financial facets of power. The EIA publishes monthly common spot costs, and every day spot prices for all of the key petroleum product lines: standard and reformulated gasoline, heating oil, diesel fuel, jet fuel and residual oil. Every day spot costs are solely collected at New York harbor, Gulf coast, and Los Angeles. Nationwide wholesale costs are available with a one-month lag. Though these alternative vitality price sources sometimes could seem to point out completely different fuel price movements from the PPI, typically those apparent differences are attributable to timing. For instance, as famous above EIA spot price knowledge displays each day prices, whereas PPI information replicate costs on a specific day of the reference month and are launched the following month. BLS analysis has constantly proven that when timing variations are taken under consideration, the PPI and EIA series are extremely comparable in their movements. The chart beneath compares the PPI for gasoline to the EIA measure of cents-per-gallon of total gasoline for all areas and grades. For comparability functions, the PPI was rebased to 88.5 (the same stage as the EIA data) in January 1983.
Different BLS applications with petroleum product costs embody the buyer Price Index (CPI), which calculates indexes for retail gasoline costs. CPIs and PPIs for gasoline differ because CPIs monitor the average change in the price paid by city customers for gasoline, whereas PPIs observe the common change over time in selling costs obtained by home refineries. As results of this methodological distinction, only CPIs seize taxes on gasoline paid by consumers. For more information on CPIs for gasoline see www.bls.gov/cpi/cpigasfac.htm.
Additional Info: Extra data on the Producer Worth Index could be found in the BLS Handbook of Strategies, chapter 14, “Producer Prices”, Bulletin 2490. Additional assitance is on the market upon request by contacting the Section of Index Analysis and Public Info at (202) 691-7705 or firstname.lastname@example.org.