Nelson-Farrar Quarterly

April 3, 2006
Continuing a trend starting in 1983, the Nelson-Farrar refinery construction index rose slowly to 1,963.

Gary Farrar, Contributing Editor



Indexes for selected equipment items
Continuing a trend starting in 1983, the Nelson-Farrar refinery construction index rose slowly to 1,963.3 in November 2005 from 1,758.8 in January 2004.

The labor component of the index and the material component rose rapidly.

The labor index rose to 2,467.9 from 2,277.1 over the 2-year period, while the materials index increased to 1,206.3 from 981.5.

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The miscellaneous equipment index varied more than 100 points in the 2-year comparison. The category includes pumps and compressors, electrical equipment, heat exchangers, instrument, and engines. Because they are manufactured items, their costs are a measure of manufacturing efficiency.

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The Nelson-Farrar refinery operations index rose 100 points during 2004-05. The process unit index also showed the same rise scenario during the 2-year period, increasing to 881.3 from its start at 614.7.

These two indexes rose continuously, increasing for 2004 and then varying during the last part of 2005. Changes in the cost of refinery fuel accounted for much of the oscillation. Continuing increases in refinery operating efficiency helped stabilize values of both indexes.

Click here to view the Refinning Cost Indexes in pdf.