HOW INDEXES HAVE RISEN

Gerald L. Farrar Contributing Editor Continuing a trend starting in 1983, the Nelson-Farrar refinery construction index rose slowly from 1144.1 in January 1988, to 1210.9 in December 1989. The labor component rose at a more rapid rate than did the materials component. The labor index rose from 1388.0 to 1469.5 over the 2-year period, while the material index rose only 45 points, from 778.2 to 823.2.

Oct. 1, 1990

Gerald L. Farrar
Contributing Editor

Continuing a trend starting in 1983, the Nelson-Farrar refinery construction index rose slowly from 1144.1 in January 1988, to 1210.9 in December 1989. The labor component rose at a more rapid rate than did the materials component. The labor index rose from 1388.0 to 1469.5 over the 2-year period, while the material index rose only 45 points, from 778.2 to 823.2.

The miscellaneous equipment index rose only 64.8 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 reflect increased manufacturing efficiency.

The Nelson-Farrar refinery operations index rose from 371.6 to 400.1 in the 19881989 period, for a rise of 28-5. The process unit index also showed a small increase over this period, rising from 417.4 to 457.7.

These two indexes varied somewhat randomly, showing month-to-month cost variations without any masking effect.

Cost data for early 1990 show the Nelson-Farrar refinery cost indexes rising at a somewhat more rapid rate than the previous 5 years. However, there has not been enough time elapsed to predict a definite trend.