In calculating the CPIXE, an energy price trend is estimated based on energy prices in the CPI in the two preceding years and projected energy prices in the coming year. [1] Estimates are only made for electricity prices and petrol prices. It is assumed that prices for other energy products move in pace with electricity and petrol prices. Electricity futures contracts are used as a basis for electricity price estimates, while petrol price estimates up to and including the calculation of the CPIXE for February 2016 were based on crude oil futures prices.

The oil price decline since summer 2014 has been accompanied by a fall in petrol prices, but the fall in petrol prices has been smaller than implied by the historical relationship between oil prices and petrol prices. Oil refineries have not reduced prices for refined products to the same extent as the decline in crude oil prices. The simple model used so far to make petrol price estimates for calculating the energy price trend in the CPIXE [2] has therefore underestimated petrol prices in relation to the actual petrol prices observed since oil prices started to fall. A new model has therefore been introduced to estimate petrol prices in the CPIXE from March 2016. In the new model, international petrol futures prices are used instead of crude oil futures prices. This is a simpler approach than passing via crude oil prices and will enable the capture of any changes in the margin between oil prices and refined petrol prices.

Footnotes

1. See Revised method for calculating the CPIXE for a further description of the calculation method.
2. See Staff Memo no. 7/2008 and Staff Memo no. 3/2009 (Norwegian only) for a further description of the model.