Price increase on natural gas

Published:

A reduction in the price of crude oil of almost 5 per cent decreased the producer price index (PPI) from July to August, but with a sharp increase in the price of natural gas, the drop in the total index was minimal.

The price of crude oil fell in August. Measured in USD the oil price ended at just over 60. The price drop happened after the US president threatened further escalation of the trade war with China over new customs duties on Chinese goods.

The price indices within mining support service activities, in addition to the production of non-metallic mineral products also contributed to the overall drop in the total PPI, with decreases of approximately 2 and 11 per cent.

Is the trend of falling gas prices about to reverse?

The price of natural gas increased from July to August after a sharp falling curve from October last year. From October 2018 to July this year, the price of natural gas fell by around 60 per cent. Not since August 2009 the price of natural gas has been at such a low level as we saw last month. A flood of gas to Europe from countries such as the United States, Australia and Russia, in the form of LNG, put pressure on Norwegian gas prices as well. Several European countries imported gas with the view that winter 2019 could be as cold as last year. However, this did not happen, which resulted in large inventories and hence a reduction in prices.

Figure 1. Price indices. 2015=100

Extraction of oil and gas PPI total
Jan. 2009 66.3 74.1
Feb. 2009 64 72.4
Mar. 2009 64.3 72.3
Apr. 2009 63 71.9
May 2009 69.6 76.6
Jun. 2009 79.7 83.3
Jul. 2009 71.9 78.6
Aug. 2009 77.7 82.4
Sept. 2009 70.6 77.5
Okt. 2009 72.5 78.6
Nov.2009 76.5 81.4
Des. 2009 75.7 81.1
Jan. 2010 81.4 84.3
Feb. 2010 82.8 86.1
Mar. 2010 86.1 88.1
Apr. 2010 92.9 91.2
May 2010 92.7 90.7
Jun. 2010 97.3 92.8
Jul. 2010 97.5 92.8
Aug. 2010 98.3 93.1
Sept. 2010 96.7 92.8
Oct. 2010 95.9 92.8
Nov.2010 101.8 96.1
Dec. 2010 107.1 100.5
Jan. 2011 112.6 103
Feb. 2011 114.4 104.2
Mar. 2011 118.9 106.9
Apr. 2011 125.5 109.4
May 2011 120.4 107.1
Jun. 2011 119.5 106.1
Jul. 2011 124.4 107.7
Aug. 2011 118.7 105
Sept. 2011 124.2 106.9
Oct. 2011 124.7 107
Nov.2011 127.9 108.5
Dec. 2011 129.3 108.7
Jan. 2012 133.9 111.1
Feb. 2012 133.5 112.2
Mar. 2012 140.7 113.9
Apr. 2012 134.6 112.1
May 2012 130.4 109.7
Jun. 2012 121.5 105.9
Jul. 2012 127.1 107.1
Aug. 2012 132.3 109.6
Sept. 2012 127.3 108.4
Oct. 2012 128.1 108.8
Nov.2012 128.4 108.5
Dec. 2012 126.5 108.4
Jan. 2013 127.4 108.5
Feb. 2013 128.6 109.1
Mar. 2013 128.7 110.1
Apr. 2013 130.1 110.3
May 2013 125.4 107.9
Jun. 2013 125.9 107.7
Jul. 2013 130.8 110.4
Aug. 2013 132.4 111.4
Sept. 2013 132.9 112
Oct. 2013 130.4 111.3
Nov.2013 132.1 111.9
Dec. 2013 136.8 113.7
Jan. 2014 136.9 114.2
Feb. 2014 135.3 113.4
Mar. 2014 127.6 110.1
Apr. 2014 126.5 109.6
May 2014 123.8 108.6
Jun. 2014 124.9 109.1
Jul. 2014 120.1 108.5
Aug. 2014 116.5 107.7
Sept. 2014 116.9 107.7
Oct. 2014 117.2 107.5
Nov.2014 108.8 104.5
Dec. 2014 109.6 104.8
Jan. 2015 98.9 100
Feb. 2015 104.3 102.1
Mar. 2015 107.4 103.5
Apr. 2015 107.4 103.5
May 2015 108.3 103.4
Jun. 2015 110.5 103.7
Jul. 2015 105.1 101.4
Aug. 2015 93.9 97
Sept. 2015 94.1 96.8
Oct. 2015 93.6 97.4
Nov.2015 92.9 97.8
Dec. 2015 83.5 93.4
Jan. 2016 70.8 89.2
Feb. 2016 68.7 86.9
Mars.2016 70.6 88
Apr. 2016 71.4 88.7
May 2016 75.8 91.1
Jun. 2016 80.5 93.7
Jul. 2016 80.7 94.1
Aug. 2016 78.2 92.4
Sept. 2016 75.5 91
Oct. 2016 78.8 93
Nov.2016 82 95.3
Dec. 2016 96.2 100.2
Jan. 2017 94.5 100.5
Feb. 2017 99.3 103.2
Mar. 2017 98.1 102.2
Apr. 2017 90.8 100
May 2017 88.5 99.2
Jun. 2017 83.8 96.7
Jul. 2017 80.8 95.7
Aug. 2017 81.4 96.1
Sept. 2017 87 98.9
Oct. 2017 95.2 101.3
Nov.2017 101.5 104.6
Dec. 2017 108.9 107.6
Jan. 2018 116.1 110.9
Feb. 2018 105 108.1
Mar. 2018 106.9 108.7
Apr. 2018 119.2 112.3
May 2018 121 113.6
Jun. 2018 122.6 116.1
Jul. 2018 123.9 117.3
Aug. 2018 126.2 118
Sept. 2018 131.6 119.7
Oct. 2018 144.7 124.1
Nov.2018 131.4 120.2
Des. 2018 119.3 115.9
Jan. 2019 120.8 116.3
Feb. 2019 122.2 116.8
Mar. 2019 115.7 114.4
Apr. 2019 116.9 115.2
Mai 2019 113.7 114.1
Jun. 2019 99.8 108.5
Jul. 2019 96.8 107.2
Aug. 2019 95.8 106.9

Higher electricity and metal prices

Electricity prices went up by 2.4 per cent from the previous month and helped to curb the overall fall in PPI from July. The price of electricity increased for several reasons. The spot price at Nordpool went up. So did the price of electricity for Norwegian households, as well as higher prices for the future fixed-price contracts associated with the power-intensive industry. Prices within basic metals increased mainly due to higher prices on non-ferrous metals.