This doc describes the methodology used by the Producer Value Index (PPI) to calculate petroleum value indexes. The primary section examines trade based PPI petroleum knowledge, the second section discusses commodity and stage of processing based mostly PPI petroleum data, and the final section supplies various resources for petroleum price information.
Industry Based mostly Indexes
Institutions in the petroleum refining industry, North American Business Classification System (NAICS) code 324110, are primarily involved in refining crude petroleum utilizing a number of of the next actions: (1) fractionation; (2) straight distillation of crude oil; and (3) cracking. Examples of major merchandise of this industry are proven in the checklist below.
A Producer Worth Index (PPI) for an industry measures price modifications received by home institutions for the industrys output offered exterior the industry. PPIs reflect the worth developments of a relentless set of goods that together characterize the full output of an business.
When an institution is requested to take part in the PPI survey, it is visited by a Bureau of Labor Statistics (BLS) economist who solicits the firm’s voluntary cooperation and informs the agency of the strict confidentiality rules that may safeguard the information being requested. Any particular product chosen from a cooperating establishment has a chance of selection proportional to its share of the establishment’s income.
From this level forward, the establishment reviews costs for the selected merchandise, normally on a monthly basis, 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 establishment fails to report or reports incomplete info, it is named by a BLS economist who requests the wanted info. Most establishments report costs by the mail; however, reporting through fax is an accessible various. Establishments continue to report until a new sample is selectedafter 7 years, on average, for an trade.
The statistical accuracy of the PPI depends closely on the quality of the knowledge offered by respondents. BLS emphasizes to cooperating companies the need for stories of sensible transaction costs, including all discounts, premiums, rebates, allowances, and so forth, rather than listing or e book costs. The dominant sort of price reported to BLS by the petroleum refining industry is an average value, although net transaction costs also are reported. Reductions are captured in over eighty percent of the sampled costs, and contractual agreements cover prices in over half of the info collected. The commonest freight phrases in this industry are FOB terminal, though FOB manufacturing unit is fairly frequent.
The value indexes ensuing from this information collection activity usually are issued in the second or third week of the month following the reference month. The specific month-to-month dates for every year are announced prior to the beginning of every calendar 12 months. All PPIs are available at eight:30 a.m. japanese time on the scheduled launch day. Information may be obtained over the Web, through a subscription, or by contacting the PPI program staff. The table under reveals the product detail for the petroleum refining industry at present out there to information customers. Most of those sequence have been published for a minimum of the past two a long time.
* These relative significance figures are efficient for January 2005. The parts do not add to a hundred.0 p.c because some objects do not meet publication standards.
All PPIs are routinely subject to revision four months after authentic publication to replicate late stories and corrections by firm respondents. When PPIs are first released, they’re sometimes primarily based on a substantial portion of the entire variety of returns that finally can be received from respondents; hence, subsequent revisions are usually minor, especially on the more highly aggregated grouping levels. The table under compares the preliminary and closing p.c adjustments for the petroleum refining industry index and two product indexes in 2003 and 2004.
Commodity Based mostly Indexes and the Stage of Processing System
In addition to business indexes, PPI presents indexes organized by a commodity classification system.
This commodity classification construction organizes merchandise by similarity of end use or materials composition, regardless of whether or not the products are classified as main or secondary in their industry of origin. This system is unique to the PPI and doesn’t match every other commonplace coding structure, such as the NAICS or the U.N. Standard International Commerce Classification (SITC). All commodity based PPI indexes are derived from corresponding business-categorised product indexes. Detailed commodities are categorised within fifteen major 2-digit commodity groupings, with petroleum related products classified in commodity grouping 05, fuels and associated products and power.
Commodity indexes type the premise for the stage of processing (SOP) system. SOP indexes are derived by regrouping commodities based on the category of purchaser and the quantity of bodily processing or assembling the products have undergone. The three principal PPI SOP classes are completed items, intermediate goods, and crude goods. Finished items are outlined as commodities which might be prepared on the market to the ultimate-demand usereither an individual shopper or a business agency. The class of intermediate materials, provides, and parts consists partly of already processed commodities that still require further processing. The intermediate items category additionally encompasses nondurable, physically complete items bought by enterprise corporations as inputs for their operations. Crude supplies for further processing are outlined as unprocessed commodities not offered on to customers.
Vitality goods inside the PPI for finished items embrace these kinds of energy to be offered to householdsprimarily gasoline, home heating oil, residential gasoline, and residential electricity. The table under shows the relative importance values to the finished items index of all vitality commodities included in the completed goods index as of December 2004. The table indicates that the PPI for gasoline (wpu0571) includes three.7 % of the finished goods index.
Various Energy Worth Knowledge Sources
The Oil Day by day, Oil Price Info Service (OPIS), the Vitality Information Administration (EIA), and other BLS price packages all provide price data for the refined petroleum business. Reuters also publishes each day value quotes.
The Oil Each day was founded in 1951 and covers all features of the crude oil, natural fuel, and refined petroleum industries. Reviews include news about particular corporations, the pricing of commodities, government policy, energy related legal cases, environmental and antitrust regulations, and international energy news. In cooperation with Reuters, the Oil Day by day collects spot costs every day for regular and premium conventional gasoline, regular reformulated gasoline, quantity two heating oil, diesel gasoline, 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 City, and Los Angeles areas.
OPIS provides its readers with price info for refined petroleum products, both on a nationwide and regional foundation. OPIS publishes weekly average prices for gasoline and heating oil. These costs are divided into contract or spot prices. OPIS provides spot costs for a wide array of petroleum products, together with heating oil, diesel fuel, unleaded, mid-premium, and premium gasoline, reformulated gasoline and jet gasoline 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 also has daily (every Thursday) web online costs out there for gasoline and distillates bought at most of the terminals around the country. These on-line costs are for a selected producer, a particular grade, a specific sort (such as oxygenated) and whether or not it’s branded or unbranded.
The EIA is a part of the U.S. Department of Vitality and it collects in depth information about prices, provide, and demand for most power commodities. It additionally publishes a gradual stream of papers on the technical and economic points of energy. The EIA publishes month-to-month average spot costs, and each day spot costs for all of the most important petroleum product strains: standard and reformulated gasoline, heating oil, diesel gasoline, jet fuel and residual oil. Each day spot prices are solely collected at New York harbor, Gulf coast, and Los Angeles. Nationwide wholesale costs are available with a one-month lag. Though these different energy price sources generally might seem to indicate different fuel value movements from the PPI, often these apparent differences are as a consequence of timing. For example, as noted above EIA spot value information reflects day by day prices, whereas PPI knowledge replicate costs on a particular day of the reference month and are released the following month. BLS research has persistently shown that when timing differences are taken into consideration, the PPI and EIA collection are extraordinarily related in their movements. The chart below compares the PPI for gasoline to the EIA measure of cents-per-gallon of whole gasoline for all regions and grades. For comparison functions, the PPI was rebased to 88.5 (the same stage as the EIA knowledge) in January 1983.
Different BLS packages with petroleum product costs embody the buyer Price Index (CPI), which calculates indexes for retail gasoline prices. CPIs and PPIs for gasoline differ because CPIs observe the average change in the price paid by city consumers for gasoline, whereas PPIs track the typical change over time in promoting costs obtained by domestic refineries. As results of this methodological difference, only CPIs seize taxes on gasoline paid by consumers. For more information on CPIs for gasoline see www.bls.gov/cpi/cpigasfac.htm.
Further Information: Extra information on the Producer Value Index might be found in theBLS Handbook of Methods, chapter 14, “Producer Prices”, Bulletin 2490. Additional assitance is accessible upon request by contacting the Section of Index Analysis and Public Data at (202) 691-7705 or ppi-information@bls.gov.
