Crude oil and natural gas prices up

Published:

9 February 2018

The Producer Price Index (PPI) increased 3.1 per cent from December to January, which continued the overall growth that started in July 2017. The rise from December to January was led by higher prices on crude oil and natural gas.

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Prices on crude oil and natural gas combined rose by 6.6 per cent from December to January, which continued the price growth on Norway’s most important exported products. Crude oil and natural gas prices have both been rising since mid-2017.

Prices on mining support services, which includes services related to extraction, grew by 9.2 per cent. However, prices on these types of services tend to fluctuate from one month to the next. Price changes are often set as new contracts are concluded, amongst other factors.

Figure 1. Price indices. 2014=100

	Extraction of oil and natural gas	PPI total
Jan. 2014	112.2	104.9
Feb. 2014	110.9	104.2
Mar. 2014	104.6	101.2
Apr. 2014	103.7	100.7
May 2014	101.5	99.8
Jun. 2014	102.4	100.2
Jul. 2014	98.5	99.7
Aug. 2014	95.5	99
Sept. 2014	95.8	99
Oct. 2014	96.1	98.8
Nov.2014	89.2	96.1
Dec. 2014	89.8	96.3
Jan. 2015	81	91.9
Feb. 2015	85.5	93.9
Mar. 2015	88.1	95.1
Apr. 2015	88	95.1
May 2015	88.8	95.1
Jun. 2015	90.6	95.3
Jul. 2015	86.1	93.1
Aug. 2015	76.9	89.1
Sept. 2015	77.1	89
Oct. 2015	76.8	89.5
Nov.2015	76.2	89.9
Dec. 2015	68.4	85.9
Jan. 2016	58	82
Feb. 2016	56.3	79.9
Mars.2016	57.9	80.9
Apr. 2016	58.5	81.5
May 2016	62.2	83.7
Jun. 2016	65.9	86.1
Jul. 2016	66.2	86.4
Aug. 2016	64.1	84.9
Sept. 2016	61.9	83.6
Oct. 2016	64.5	85.4
Nov.2016	67.2	87.6
Dec. 2016	78.8	92.1
Jan. 2017	77.5	92.4
Feb. 2017	81.4	94.9
Mar. 2017	80.4	93.9
Apr. 2017	74.4	91.9
May 2017	72.6	91.2
Jun. 2017	68.7	88.9
Jul. 2017	66.3	88
Aug. 2017	66.7	88.3
Sept. 2017	71.3	90.9
Oct. 2017	78	93.1
Nov.2017	83.2	96.1
Dec. 2017	89.3	98.9
Jan. 2018	95.1	101.9

Continued growth in manufacturing prices

Prices in manufacturing industries are characterised by steady growth since August 2017. This trend continued from December to January with an overall growth in manufacturing prices of 0.9 per cent. The increase from December to January was caused by higher prices in several industries. However, food products together with chemicals and pharmaceutical products were a major contributor to the overall growth in manufacturing prices. In addition, prices on repair and maintenance of machinery grew by 1.6 per cent. Price changes in this industry mainly take place at the turn of the year.

In the period August 2017-December 2017, the increasing manufacturing prices were largely driven by rising prices on refined petroleum products and basic metals. The rising prices on basic metals together with a decreasing exchange rate against several important currencies have contributed to higher prices on exported goods in this period.

Figure 2. Price indices. 2014=100

	Manufacturing total	Refined petroleum products	Basic metals
Jan. 2014	99.9	104.7	91.9
Feb. 2014	99.9	104.9	92.7
Mar. 2014	99.4	102.6	92.5
Apr. 2014	99.5	101.9	94.8
May 2014	99.5	101.6	95.6
Jun. 2014	100.1	103.5	98.8
Jul. 2014	100.7	104.7	101.8
Aug. 2014	101.2	104.1	102.4
Sept. 2014	100.6	98.7	104.9
Oct. 2014	100.3	97.5	105.1
Nov.2014	100	92.7	107.7
Dec. 2014	99	83.4	111.8
Jan. 2015	97.5	71.6	115.6
Feb. 2015	98.4	74	114.6
Mar. 2015	99.1	79.8	117.3
Apr. 2015	99.4	82.3	114
May 2015	99.5	82.8	112.4
Jun. 2015	99.7	83.2	112
Jul. 2015	99.8	82.4	109.6
Aug. 2015	98.6	76.8	106.5
Sept. 2015	97.4	71.6	105.8
Oct. 2015	97.8	73.6	105.3
Nov.2015	98.4	72.8	104.6
Dec. 2015	97.4	68.1	102.4
Jan. 2016	96.1	61.3	101.1
Feb. 2016	95.4	57.4	99.8
Mars.2016	95.7	58.8	99.5
Apr. 2016	96.4	62.7	98.1
May 2016	97.8	68.6	98.7
Jun. 2016	99	73.6	98.7
Jul. 2016	100.3	76.5	102.7
Aug. 2016	99.1	70.7	106.2
Sept. 2016	98.6	70.8	104.6
Oct. 2016	99.1	73.4	103
Nov.2016	99.9	76.1	105.6
Dec. 2016	100.6	77.7	108.6
Jan. 2017	102.6	87.6	110.9
Feb. 2017	104.6	94.1	115.9
Mar. 2017	104	87.3	118.5
Apr. 2017	104.3	86.2	121.5
May 2017	104.2	82	122.3
Jun. 2017	103.5	77.8	121
Jul. 2017	103	74.6	121
Aug. 2017	102.9	77.2	121.3
Sept. 2017	104.2	85.5	123.2
Oct. 2017	104.7	90.9	121.3
Nov.2017	105.9	92.2	128.3
Dec. 2017	107.6	101.3	129.8
Jan. 2018	108.5	101.8	130.4

Updated weights for 2018

The PPI is computed as a weighted mean of price changes. For the PPI to best reflect the structure of the Norwegian industry, the weights are updated each year. The new weights are in effect from January and represent the production values of the various industries the previous year.

In the weights for 2018, the largest change from the previous year comes from extraction of oil and natural gas. The production values within the industry rose by over NOK 60 billion from 2016 to 2017. This can largely be explained by higher prices on oil and natural gas through 2017 compared to 2016. This means that oil and natural gas as a share of the total weights increases from 29 per cent in 2017 to 32 per cent in 2018.

The manufacturing industry as a whole had higher production values in 2017 compared to 2016. As a share of the total weights in 2018 however, they were almost unchanged from 2017. The reason is that the total production values for the PPI rose as a whole, because of higher values within oil and natural gas. This means that while the overall values have increased for the manufacturing industry, their share of the total PPI has not. Within manufacturing, refined petroleum products increased the most, while machinery and equipment went down the most.

Detailed figures on the weights can be found in StatBank and in table 1.