Fossils Up and Down

The latest Producer Price Index data was published on Oct. 8. The PPI isn’t quite as well-known as its famous cousin, the Consumer Price Index, the CPI. Though analysis of the PPI also provides valuable insights for those of us in utility regulation and policy.

There’s PPI data for coal mining back to 1985. Coal prices declined from 1985 to the year 2000 averaging fifteen percent less at the century’s turn. That was the low point for coal prices. They’ve shot up since.

Coal prices increased nearly forty percent during to 2000 to 2005 period. But that was nothing. During the subsequent 2005 to 2012 period, coal prices increased another eighty-plus percent.

Coal prices have moderated a little since the high in 2012. Still, in September 2019, the PPI for coal mining was 202.1. That’s nearly two and a half times higher than the PPI for coal mining in September 2000, when it was 83.5.

In stark contrast, the PPI for natural gas from the wellhead was 62.2 in September 2019. Natural gas prices haven’t been this low since September 1995 and since way back in September 1980.

And the current price of natural gas is really down from where it was just a few years ago. The PPI for natural gas was as high as 282.7 as recently as September 2008. And as high as 376.3 in September 2005.

This means natural gas prices have fallen seventy-eight percent since 2008 and eighty-three percent since 2005. Ok, that’s a steep fall.