Gary Farrar
Contributing Editor
Continuing a trend starting in 1983, the Nelson-Farrar refinery construction index rose quickly to 2,378.1 in December 2010 from 2,281.6 in January that year (see table at right). Then it slowed and ended with 2,457.9 in December 2011.
The labor index rose to 3,017.3 from 2,865.4 during the 2-year period, while the materials index also increased to 1,618.8 from 1,405.8.
The miscellaneous equipment index varied a modest 34 points in the 2-year comparison. The category includes pumps and compressors, electrical equipment, heat exchangers, instruments, and engines. They are thus manufactured items, and their costs are a measure of manufacturing efficiency.
The Nelson-Farrar refinery operations index fell and then rose during the 2-year period. It settled with a very mild decrease. The process unit index varied during 2010 and then ended with more than a 100 point loss during 2011, falling to 772.3 after starting at 882.6. These two indexes varied during 2010 and then ended slightly lower during 2011. Changes in the cost of refinery fuels accounted for much of the variation. Continuing increases in refinery operating efficiency helped stabilize values of both indexes.
