On August 12, the Labor Department published the Producer Price Index data through July 2016. Price trends are still good for electric and natural gas consumers. And price levels are historically favorable for consumers.
But the four monthly data series we track, from three federal departments, Labor, Commerce and Energy, are beginning to tell us something new.
But first, what did the Producer Price Index have to say?
At the intermediate demand stage of our economy, the price of electric service to commercial customers fell 1.8 percent over the last year. That's really good. And the price of natural gas service to commercial customers also fell 1.8 percent.
The price of electric service to industrial customers fell 4.7 percent. And the price of gas service to industrial customers fell 3.1 percent. Price trends in the industrial sector are not as indicative since the sector is so heterogeneous.
The price of coal, an input to the production of electricity, fell 3.8 percent. But natural gas fell just 1 percent. And the price of gas purchased by the electricity sector was roughly unchanged from a year ago, up 0.1 percent.
At the final demand stage of our economy, the price of electric service to the residential sector fell modestly, by 0.3 percent. The price of gas service to the residential sector actually rose a little, by 0.8 percent.
So, we are beginning to see something new.
It would appear that the enormous fruits of the fracking revolution in natural gas production have fully kicked in. Consumer prices are near historic lows, in real terms. They've been falling for the last few years.
However, we may be seeing the bottoming out of consumer prices, as gas prices have bottomed out. If so, in coming years, real consumer prices might rise from their near historic lows.
Number-crunching and price soothsaying courtesy of Public Utilities Fortnightly.
Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com
