Monthly Labor Review - November 2006

Import and Export Price Indexes, 2005

Import price rise in 2005
due to continued high energy prices
The rise in energy prices influenced the overall
increase for import prices and the rise in soybean prices
led the increase in agricultural export prices; Hurricanes
Katrina and Rita caused short-term shocks to prices
Jeffrey Bogen

Jeffrey Bogen is
an economist in the
Office of Prices and
Living Conditions,
Bureau
of Labor Statistics.
E-mail:
[email protected]

I

mport prices rose 8.0 percent in 2005—the
fastest pace since 1987 and the fourth
consecutive annual increase—following an
increase of 6.7 percent a year earlier. Excluding
energy goods, import prices rose a comparatively modest 1.1 percent following a 3.0percent increase a year earlier. Export prices rose
2.8 percent, also the fourth consecutive annual
increase, but a smaller increase than the 4.0percent increase in 2004. Excluding agricultural
products, export prices rose 2.6 percent following
a 5.0-percent increase a year earlier.
Although hurricanes Katrina and Rita caused
price surges for products ranging from building
materials to petroleum-based chemicals, these
shocks appear to have been only short term.1
The more noteworthy story in 2005, however,
was the continuation of rising prices for energy
and raw materials. Import energy prices, which
rose 43.5 percent, had a substantial impact on
overall import prices as energy products made
up 13 percent of all imports.2
Exchange rates also affected import prices and
were reflected in the Locality of Origin price
indexes. These price indexes measure price
fluctuations of imported products aggregated by
the country or region from which they were
imported. This aggregation method allows
analysts to study the effects of exchange rates
on import prices. The European Union (EU) price
index of manufactured goods and the Japanese
price index, which ended 2005 up 1.8 percent and
down 0.7 percent, respectively, increased early
in the year due to a comparatively weak dollar,

but declined in the second half of the year as the
dollar strengthened. By the end of the year, the
dollar had appreciated 10.2 percent against the
euro and 13.1 percent against the Japanese yen.3
In contrast, the U.S. dollar depreciated 1.3
percent against the Canadian dollar in 2005. The
strong Canadian dollar, along with higher energy
prices, contributed to the 11.1-percent increase
in the Canadian price index.4
This article contains analysis of the annual
data from the Bureau of Labor Statistics
International Price Program (IPP). It focuses on
import and export price trends for all goods.5 This
article also provides some analysis of the price
indexes for transportation services between
establishments in the United States and those in
other countries.

Other price measures
The IPP, along with the Consumer Price Index
(CPI), which measures monthly price changes for
consumer goods and services, and the Producer
Price Index (PPI), which measures monthly
fluctuations in prices received by domestic
producers, form the three major BLS pricemeasuring programs.
Similar to the trends for the Import and Export
Price Indexes, the Consumer Price Index for All
Urban Consumers (CPI-U) and PPI increased in
2005. The increases for both the CPI-U and PPI,
like those for the Import and Export Price Indexes,
were heavily influenced by sharply higher
energy prices. When energy prices are excluded
Monthly Labor Review

November 2006

3

Import and Export Price Indexes

from all four price indexes, the increases were comparatively
modest and the indexes remained relatively stable, although the
Import and Export Price Indexes varied more in magnitude during
2005 than the CPI-U and PPI. The price indexes, with the exception
of the CPI-U, declined in the last quarter. (See chart 1.)
The energy component of the CPI-U rose 17.1 percent in
2005 compared with an increase of 16.6 percent a year earlier.
When energy prices are excluded, the CPI-U increased 2.2
percent, which was identical to the increase recorded a year
earlier. Overall, the CPI-U rose 3.4 percent following an increase
of 3.3 percent in 2004.
Energy prices tracked by the PPI for finished goods
increased 23.9 percent following a smaller increase of 13.4
percent in 2004. Excluding energy, prices for finished goods at
the producer level rose 1.5 percent after rising 2.5 percent in
2004. Overall, the PPI for finished goods rose 5.4 percent after
a 4.2-percent increase in 2004.

Import price trends
Energy. Import energy prices rose 43.5 percent following a 31.5percent increase in 2004 and had a significant influence on the
overall increase for import prices in 2005. (See table 1.) Prices for
energy products rose throughout most of the year, but weakened
demand caused prices to decline in the last quarter.

Supply concerns permeated the energy markets early in
the year. Analysts cited low crude inventories and the lack of
spare production capacity in oil exporting countries.6 Though
crude oil inventories declined domestically on a weekly basis
during that period, they were still higher compared with
inventory levels for the same period in 2004.7 Damage to
production facilities from the 2004–05 hurricane season,
Hurricane Ivan in particular, hampered crude oil production in
the southern United States. As a result, the equivalent of 8
percent of daily production remained closed for repair during
January 2005.8
Supply concerns for refined products continued throughout the spring due to scheduled maintenance at U.S. refineries,
which kept some off line longer than anticipated.9
Anticipation of a continued surge in demand from China
also contributed to higher energy prices early in the year.
Petroleum demand in China spiked in 2004 due to widespread
blackouts that forced many factories to supply their own
electricity using diesel-powered generators.10 Instead of
continuing to increase, China’s growth rate of petroleum
demand was nearly cut in half after its domestic electricity
situation stabilized. (See chart 2 on page 6.) Even with demand
from China slowing, global demand for petroleum remained
strong early in the year when cold weather in North America
increased demand for heating oil.11

Chart 1. Changes in the Consumer Price index, Producer Price Index, and import and export
prices indexes, 2001–05
12-month
percent change

12-month
percent change

6

6

4

4

2

2

0

0

Imports excluding petroleum

-2

-2

Exports excluding agricultural products
CPI less food and energy
-4

-6

4

PPI for finished products less food and
energy

Jan.
2001

Monthly Labor Review

Jan.
2002

November 2006

Jan.
2003

Jan.
2004

Jan.
2005

-4

-6

Table 1.

U.S. import and export price indexes annual percent changes for selected categories of goods, 1996–2005

End
use

Description

Relative
importance
November
2005 1

Percent change for 12 months ended in December
1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Imports
All commodities ...............................................
All imports excluding petroleum ......................
All imports excluding fuels ..............................
........................................................................
Foods, feeds and beverages ......................

100.000
81.385
78.079

1.5
–1.8
–

–5.2
–2.8
–

–6.4
–3.3
–

7.0
.0
–

3.2
1.3
–

–9.1
–4.5
–

4.2
.3
.0

2.4
1.2
1.0

6.7
3.7
3.0

8.0
2.4
1.1

4.549

–1.3

1.3

–3.1

–.3

–4.0

–4.7

5.9

3.0

8.0

5.4

Industrial supplies and materials ................
Excluding petroleum .............................
Excluding fuels .....................................
Fuels and lubricants ................................
Petroleum and petroleum products .....
........................................................................
Capital goods ..............................................
Excluding computers, peripherals, and ...
semiconductors ....................................
........................................................................
Automotive vehicles, parts and engines ....

35.531
16.916
13.610
21.921
18.615

9.1
–2.4
–
34.4
33.7

–1.4
–1.7
–
–23.8
–25.5

–17.1
–6.7
–
–36.5
–4.8

33.7
5.1
–
114.7
137.2

13.8
11.2
–
27.1
17.6

–24.6
–14.6
–
–41.9
–39.5

21.9
5.8
3.6
53.7
56.9

9.5
7.2
6.3
13.2
12.8

22.0
16.4
13.4
31.5
3.3

25.5
11.3
4.4
43.5
42.4

2.547

–3.8

–7.4

–5.0

–3.3

–2.1

–2.7

–2.4

–1.1

–.8

–1.3

14.326

–2.6

–4.7

–2.1

–1.8

–1.1

–1.0

–1.3

1.2

2.0

1.2

15.340

.0

.5

.0

.7

.7

–.2

.5

.9

1.8

.4

Consumer goods, excluding automotives ...
...............................
Exports

24.033

–.7

–.9

–1.3

–.4

–1.2

–.8

–.7

.1

.9

.6

All commodities ...............................................
Agricultural commodities .................................
Nonagricultural commodities ...........................

100.000
8.839
91.160

–1.1
–6.9
–.4

–1.2
–2.9
–1.0

–3.4
–9.3
–2.7

.5
–6.8
1.2

1.1
3.1
.9

–2.5
–1.8
–2.5

1.0
8.0
.4

2.2
13.4
1.3

4.0
–5.9
5.0

2.8
4.9
2.6

Foods, feeds,and beverages ......................
........................................................................
Industrial supplies and materials ................
Nonagricultural industrial supplies ...............
and materials ...........................................
........................................................................
Capital goods ..............................................
Excluding computers, peripherals,
and semiconductors ..............................

8.054

–6.5

–3.3

–8.3

–5.7

1.7

–.5

7.9

12.6

–4.5

4.3

29.794

–2.3

–1.4

–7.1

5.3

3.6

–8.6

5.0

6.8

15.1

8.4

28.230

–2.2

–1.3

–6.9

6.3

3.3

–8.4

4.8

6.3

16.6

8.3

39.098

.1

–1.6

–1.8

–1.1

.3

–.8

–1.3

–.6

.7

–.5

28.906

1.4

–.3

–.7

–.4

.8

.0

.5

.9

2.1

2.1

3

Automotive vehicles, parts, and engines ...

11.000

.4

.8

.5

1.0

.5

.4

.8

.5

1.1

1.0

4

Consumer goods, excluding automotives ...

12.019

1.4

.8

–.8

.6

–.4

.2

–.6

.6

1.3

.7

0
1

10
100
2

3
4

0
1

2

1

Relative importance figures are based on 2003 trade values.

Weather concerns sent energy prices even higher in 2005,
especially in May, when the National Weather Service
released a report predicting an active Atlantic hurricane
season.12 Soon after the release of that report, tropical storm
Arlene made landfall in early June. Though causing little
damage to oil infrastructure in the Gulf of Mexico, the first
storm of the season gave the energy markets reason to be
cautious.13 Texas, Louisiana, and Mississippi were then
battered by Hurricanes Katrina and Rita in late summer and
early fall. Crude oil import prices were largely unaffected by
these storms even though Louisiana’s main crude oil terminal
was temporarily shut down after Hurricane Katrina. The
terminal closure had a ripple effect through the production
chain as it squeezed supplies of crude oil to refineries as far
north as Illinois, Indiana, and Ohio.14 Prices for crude oil rose

N OTE: Dash indicates data not available.

a comparatively modest 3.9 percent in September, after
increasing 29.8 percent over the previous 3 months, and
declined in both October and November. These post-storm
decreases were attributed to weaker demand in response to
consistently high price levels and a warm beginning to the
2005–06 winter heating season. 15 The hurricanes had a larger
impact on the supply of refined products than crude oil
because much of the refining infrastructure used to produce
these products is located in the gulf region. Ten refineries
spread throughout Louisiana, Mississippi, and Alabama were
shut down immediately after Hurricane Katrina struck.16
Hurricanes Katrina and Rita affected also domestic natural
gas production. Hurricane Katrina destroyed 108 platforms in
the Gulf of Mexico and damaged underwater pipelines. This
damage reduced gulf-area gas production by almost 320 billion
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November 2006

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Import and Export Price Indexes

Chart 2. Petroleum consumption in China, 2000–05
Petroleum consumption
(millions of barrels per day)

Annual
percent change
16

8

7

Petroleum consumption

14

Annual percent change
6

12

5

10

4

8

3

6

2

4

1

2

0

0
2000

2001

2002

2003

2004

2005

SOURCE: U.S. Department of Energy, Energy Information Agency.

cubic feet, which is roughly equal to 5 days worth of domestic
consumption.17 As a result, import prices rose 29.0 percent in
August and 24.8 percent in September. Natural gas prices
ended the year 54.9 percent higher, and have tripled since
2001.
Nonfuel industrial supplies and materials. Prices for
industrial supplies, excluding energy, rose 4.4 percent, which
was a comparatively smaller increase compared with the 13.4percent increase in 2004. The demand slowdown in the steel
market was a major factor for the smaller increase in 2005. In
2004, many companies feared shortages would develop due
to strong Chinese demand, which led many to purchase two
to three times more steel than needed.18 This strategy caused
inventories to rise, which ultimately softened demand.
Although the overall trend in steel prices for the year was
down, prices for steel scrap and lower cost alternatives rose
early in the year as manufacturers attempted to lower
operating costs.
Hurricane Katrina had a short-term impact on building
materials, and through the first half of 2006, the long-term
effects appear to be minimal. The index for building materials
excluding petroleum rose 4.5 percent in September and 4.6
percent in October, but then remained relatively flat for the
last 2 months of the year. New home construction typically
6

Monthly Labor Review

November 2006

slows down in the North during the winter months, so overall
demand for building materials typically slips in the fall and
winter months, which usually causes this price index to decline
late in the year. However, the hurricanes initially sparked fears
of supply shortages, which led to higher prices in September
and October.19 Prices subsequently stabilized as higher costs
in the South, due to storm-related plant outages and higher
demand, were offset by decreased new home construction in
the North.
Capital goods. Prices for capital goods decreased 1.3
percent, which was larger than the 0.8-percent drop in 2004.
The decline was led by computers and telecommunications
equipment, both of which continued well-established
downward trends. Prices for electronic equipment typically
fall as products eventually become obsolete and new
products are introduced to replace them. Computer, peripheral,
and semiconductor prices, as well as telecommunications
equipment prices, declined steadily throughout the year and
ended the year down 5.2 and 2.4 percent, respectively. The
constant declines in computer prices overall were due to
continued weak demand, technological improvements, and
price competition; however, demand for laptop and handheld
computers remained healthy, though not strong enough to
overcome declining prices for other computer products.

Prices for capital goods excluding computers and
semiconductors increased for the third consecutive year. The
index rose 1.2 percent compared with 2.0 percent in 2004. The
main influences on these prices were raw materials prices
(especially for copper and steel) and the demand for oil drilling
equipment. Many companies renegotiated steel contracts at
the beginning of the year to reflect the spike in prices that
occurred in 2004. Higher copper prices later in the year affected
electrical generating equipment. Oil drilling and mining
equipment prices rose steadily and consistently throughout
the year, increasing 8.3 percent in 2005. This followed a large
increase of 12.9 percent in 2004. Prices increased due to higher
raw material costs and greater demand due to consistently
high oil prices.
Automotive vehicles, parts and engines. The price index for
automotive vehicles, parts and engines increased 0.4 percent
in 2005, which was the fourth consecutive annual increase.
Prices for passenger vehicles ended the year 0.1 percent higher
due to continued high demand, especially for imported luxury
automobiles. Demand has remained strong because buyers of
luxury vehicles were not deterred by high gasoline prices.20
The price index for parts and engines increased 0.4 percent
in 2005 following a 2.5-percent increase a year earlier. Prices
for car parts were affected throughout the year by raw material
prices and exchange rate fluctuations. Manufacturers passed
on higher prices for rubber and steel, but an appreciating
dollar against the euro and Japanese yen mitigated the raw
material effect.21
Consumer goods. Continuing a trend that began in 2003,
the price index for consumer goods increased 0.7 percent in
2005 following a larger increase of 1.3 percent in 2004. Due to
the makeup of this particular index which includes, among
others, apparel, jewelry, household goods, and pharmaceuticals, prices were more sensitive to monthly exchange
rate fluctuations and less sensitive to raw material costs such
as steel and copper. Prices rose early in the year when
businesses renegotiated contracts to reflect a weak U.S. dollar
versus the Euro and Japanese yen. Higher prices for plastics
and energy also added upward pressure on the price index.
Like computer and telecommunications equipment prices,
prices for home entertainment equipment, and to a lesser
degree recreational equipment, fell consistently throughout
the course of the year. Production cost savings due to
economies of scale along with strong competition drove prices
in home entertainment equipment downward. In contrast,
jewelry prices were stable early in the year and rose sharply
near the end of 2005 due to rising gold prices. Growing inflation
worries and uncertainty in the midst of ever rising energy
costs caused investors to pour money into the gold market,
thus increasing demand and raising prices. Higher demand

for other consumer nondurables, in particular,
pharmaceuticals, also increased prices in this category during
2005. Goods in this area, which are of an organic chemical
origin, were sensitive to rising petroleum prices.22
Foods, feeds, and beverages. Prices for imported foods, feeds,
and beverages rose 5.4 percent in 2005 after an increase of 8.0
percent in 2004. This index has risen every year since 2002.
Although the increase was steady throughout most of 2005, the
index matched the largest ever monthly increase in March, rising
3.3 percent. Poor crop conditions due to wet weather in Mexico,
which is where the majority of imported vegetables are grown,
caused the large increase. Prices subsequently normalized in
June, when the index fell 1.2 percent, the largest drop since a 1.2percent decline in May 2003.
Locality of Origin price indexes. Similar to overall import
prices, high energy prices influenced many of the Locality of
Origin price indexes. In particular, energy prices led the
increase in import prices from the Asian Near East region
(commonly known as the Middle East), where crude oil carries
a higher weight than any other published region.23 The price
index for this region posted a 30.1-percent increase in 2005
after a 22.7-percent increase a year earlier. Although the Asian
Near East region includes two of the United States largest
suppliers of crude oil, Canada is actually the largest supplier.
(See chart 3.) Import prices from other major suppliers of
energy products rose as well, including Mexico and the EU.
Mexico, as seen in chart 3, is the second largest supplier of
crude oil to the United States. The Mexican price index rose
8.5 percent following a 4.0-percent increase in 2004. The
increase in the EU price index slowed to 2.6 percent after a 7.0percent increase a year earlier. Although the EU price index
was affected by high energy prices, the appreciation of the
dollar against the euro mitigated the effect.
Prices of products produced in regions from which the
United States does not import energy products, such as East
Asia, were less affected by high energy prices. Import prices
from China fell 0.5 percent following a 1.0-percent decline in
2004. The Japanese price index fell 0.7 percent following a 1.3percent increase in 2004 and was affected by the appreciation
of the dollar against the Japanese yen. After depreciating 4.1
percent against the Japanese yen in 2004, the dollar
appreciated 13.1 percent in 2005. Prices of products from
Asian Newly Industrialized Countries declined 2.3 percent—
a steeper decline compared with the 0.3-percent decline in
2004—and have declined annually since a 0.5-percent
increase in 1995.24

Export price trends
Agricultural goods. Prices of exported agricultural goods rose

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November 2006

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Import and Export Price Indexes

Chart 3. Top 10 countries of origin for U.S. crude oil, 2005 totals
Millions of barrels
0

100

200

300

400

500

600

700

0

100

200

300

400

500

600

700

Canada
Mexico
Saudi Arabia
Venezuela
Nigeria
Iraq
Angola
Ecuador
Algeria
United Kingdom

Millions of barrels
SOURCE: U.S. Department of Energy, Energy Information Agency.

4.3 percent following a decrease of 4.5 percent in 2004. Movement
in soybean prices led the index for much of the year. The record
harvest in 2004 depressed soybean prices in early 2005, so even
with a large harvest in 2005, prices were 8.8 percent higher than a
year earlier. Soybean prices rose 18.3 percent in March, when the
U.S. Department of Agriculture (USDA) indicated that farmers
would plant fewer acres than in previous years, partly due to
fears of Asian Soybean Rust.25 Also, drought conditions
affecting the 2004–05 crop in South America added to concerns
of possible lower world soybean supplies.26 Soybean prices then
fell 10.5 percent in September due to good late-season weather in
the United States, which boosted the harvest to a level second
only to the record set in 2004.27
Hurricane Katrina had little impact on export agricultural
prices. Grain exports through the Port of New Orleans were
interrupted for 2 weeks as a direct result of storm damage, but
because the duration of the closure was relatively short and
exports were quickly rerouted to other ports, prices were
largely unaffected. 28 September export agricultural prices
actually fell when the USDA raised its production forecasts for
corn and soybeans.29
The poultry export market was deeply affected by anxiety
related to avian influenza. Poultry demand fell sharply in
Europe, especially in Russia, the United States biggest poultry
8

Monthly Labor Review

November 2006

customer, as consumers feared contracting avian influenza
from poultry.30
Nonagricultural industrial supplies and materials. The
export nonagricultural industrial supplies and materials price
index rose 8.5 percent in 2005, which was roughly half of the
advance seen in 2004. The majority of the upward movement
was due to products that use energy products as an input,
and many of these price increases were directly and indirectly
influenced by hurricanes. Hurricane Katrina directly affected
prices for plastic and chemical products because many plants
located in the gulf region were forced to close for repairs.
These closures reduced supplies and as a result, prices
peaked in October and November. Supplies improved and
prices normalized in December as plants reopened after
completing repairs. In contrast, rising petroleum prices,
combined with short-term shocks from hurricane damage,
indirectly led to higher prices in further stages of production,
especially for products using natural gas as an input.
Due to the global nature of the steel industry, export steel
prices behaved much the same as import prices with similar
demand pressures. Specifically, export steel prices declined 2.2
percent in 2005 after surging 53.1 percent a year earlier. In
contrast, nonferrous metals prices continued to rise, increasing

19.0 percent in 2005 following a 24.8-percent advance in 2004. In
particular, copper and aluminum prices saw gains which were
driven, in part, by the influx of money into commodity markets
from investment funds as well as industrial demand.31
Capital goods. After a 0.7-percent increase in 2004,
exported capital goods prices decreased 0.5 percent in 2005.
As with imports, the decline in capital goods prices was largely
due to the continuation of a long-term downward trend in
prices for computers, peripherals and semiconductors, which
fell 7.1 percent. Telecommunications equipment prices also
played a role in the decline, falling 1.2 percent.
The price index for capital goods excluding computers,
peripherals, and semiconductors, increased 2.1 percent for
the second consecutive year, which was the largest annual
increase since 1995. Similar to imports, strong demand for oil
drilling equipment led to higher prices. Although strong
demand existed for industrial and service machinery, higher
raw material prices also played a role in the price increases for
these products. Prices for electrical generating equipment
were stable early in the year, then fell when the dollar
appreciated against major foreign currencies.32
Automotive vehicles, parts and engines. The price index
for automotive vehicles, parts and engines rose 1.0 percent in
2005, which was less than the 1.1-percent increase in 2004,
due to falling sales and lower demand. The indexes for both
passenger cars and trucks increased 0.7 percent after holding
steady during the first half of the year.
However, prices for automobile parts increased steadily
throughout 2005 and ended 1.1 percent higher than a year
earlier. This increase was driven by higher raw material prices,
especially for steel, rubber, and energy. Similar to the imports,
manufacturers of parts for export had absorbed much of the
increases in raw material costs, especially the jump in steel
prices during 2004, but began passing on some of those extra
costs to vehicle manufacturers.33
Consumer goods. Consumer goods increased 0.7 percent
in 2005. This was the third consecutive annual advance,
although less than the 1.3-percent rise in 2004. Prices for
apparel, consumer nondurables, and household goods
fluctuated throughout the year and closely followed the
movement of the dollar against major foreign currencies.
Recreational equipment prices, however, were stable during
the first half of the year, then increased during the remaining
6 months due to higher raw materials costs, namely plastics,

fiberglass, and resins. Consumer electronics prices, however,
declined throughout the year, which prevented the aggregate
from increasing more than it did. Prices declined for electronic
products in this index because of competitive pressures in
the market.

Services price trends
The IPP currently publishes several indexes which capture
transactions of transportation services between parties in the
United States and abroad. Air passenger fares were driven in
part by exchange rate fluctuations—a deviation from the
historical trend of moving in response to seasonal demand
factors. The price index for export air passenger fares, which
measures changes in fares paid to U.S. carriers by foreign
residents for international travel, ended the year down 4.3
percent and was primarily affected by the U.S. dollar
weakening against the Canadian dollar. The weaker dollar had
the opposite effect on the import side where the price index
for import air passenger fares, which measures changes in
fares paid to foreign carriers by U.S. residents for international
travel, rose 4.1 percent. Fares on Canadian routes, both
inbound and outbound, increased steadily throughout 2005,
and bore the brunt of the weakening U.S. dollar versus the
Canadian dollar. Canadian routes have less competition than
routes to other locations; therefore, airlines were able to pass
on rising fuel costs more easily to passengers on these routes.
The price index for export air freight, which measures
changes in rates paid for the transportation of freight from the
United States to foreign countries on U.S. air carriers, rose 5.6
percent, compared with the 11.2-percent increase in 2004.
Strong demand and rising fuel surcharges drove the increase
in rates for export air freight. The price index for import air
freight, which measures changes in rates paid for the
transportation of freight from foreign countries to the United
States on foreign air carriers, rose 1.7 percent in 2005 following
an increase of 10.4 percent in 2004.
Rising fuel costs also affected rates for ocean liner freight.
Inbound ocean liner freight rates rose 3.3 percent in 2005 due
to higher fuel surcharges along with consistent demand. The
inbound crude oil tanker index retreated from the peaks of late
2004, but rates rose in the fourth quarter due to hurricanes in
the southern United States. Overall, rates fell 17.2 percent
after doubling in 2004. This slight correction in rates coincided
with a 0.6-percent decrease in total crude oil imports, which
increased 4.7 percent in 2004. Nearly steady crude oil imports,
and not a sharp decline, prevented a larger correction in rates.

Notes
1
Timothy Aeppel and Steve LeVine, “Hurricanes Has Mixed
Impact on Profits, Depending on the Industry,” The Wall Street Journal,
Feb. 6, 2006, p. A3.

2
The weights used in calculating the import and export price
indexes are updated annually, though with a 2-year lag. Thus, the 2005
import and export indexes were calculated with weights based on trade

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November 2006

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Import and Export Price Indexes

dollar values from 2003. For this reason, this figure was based on 2003
trade dollar values.
3

Exchange rates quoted in this article compared December 2004
with December 2005 using data from the Pacific Exchange Rate
Service. On the Internet at http://fx.sauder.ubc.ca/data.html
(visited July 20, 2006).
4

The relationship between U.S. and Canadian currencies can affect
import and export prices because Canadian goods represented 17.2
percent of all imports to the United States in 2005, based on trade
dollar value, more than any other nation. Canada also consistently
ranks as the top trading partner of the United States. Data were
obtained from the United States Census Bureau’s Foreign Trade
Statistics. On the Internet at http://www.census.gov/foreign-trade/
statistics/highlights/top/top0512.html (visited June 21, 2006).
5
The Import and Export Price Indexes to not track price movements for military goods, artwork, used items, charity donations,
railroad equipment, items leased for less than a year, rebuilt and repaired
items, and selected exports (custom-made equipment).
6

Bob Tippee, “Industry Facing Product Delivery, Quality
Challenges,” Oil & Gas Journal, Feb. 21, 2005, p. 33.
7
Marilyn Radler, “US Oil, Gas Demand Rising Again in 2005,” Oil
& Gas Journal, July 4, 2005, pp. 32–34.
8
EIA Petroleum Monthly Marketing Review (U.S. Department of
Energy, Energy Information Agency, April 2005) (review for January
2005).
9

Ibid, June 2005 (review for March 2005).

10
Shai Oster, “Chinese Oil Demand Gets Harder to Gauge,” The
Wall Street Journal, Jan. 17, 2006, p. A2.
11

Jad Mouawad, “Oil Price Rise Amid Concern Over Weather And
Supplies,” The New York Times, Feb. 23, 2005, p. C1.
12
EIA Petroleum Marketing Monthly (U.S. Department of Energy,
Energy Information Agency, September 2005) (review for June 2005).
13

Ibid.

14

Ibid, December 2005 (review for September 2005).

15
Ibid, January 2006 (review for October 2005) and February
2006 (review for November 2005).

16
Ibid, December 2005 (review for September 2005). As a result,
prices for refined products rose 22.9 percent in September.

17
Rebecca Smith and Russell Gold, “Cold Spell: Years of ShortTerm Strategy Create a Crunch in Natural Gas; Consumers Face Soaring
Bills In Winter as Utilities Fail To Hedge Against Risks; Asking the
Public for Charity,” The Wall Street Journal, Oct 17, 2005, p. A1.
18
Claudia H, Deutsch, “Is the Steel Industry in a Boom or on a
Bubble? “ The New York Times, Jan. 18, 2005, p. C1.
19
NAHB Releases Study on Impact of Katrina (National Association
of Home Builders), on the Internet at http://www.nahb.org/news_

10

Monthly Labor Review

November 2006

details.aspx?newsID=1572 (visited July 18, 2006).
20
According to data obtained from the United States Census
Bureau’s Foreign Trade Statistics, the dollar value of imported vehicles
and parts increased nearly 5 percent in 2005 from a year earlier.
21
Greg Schneider, “Steel Prices Hurt Auto-Parts Business; Industry
Study Warns of Job Losses,” The Washington Post, Feb. 16, 2005, p. E3.
22
John Hoffman, “Global Insights: Peak Oil Approaching a New
World Order?” Chemical Market Reporter, Jan. 17, 2005, pp. 21–22.
23
According to year-2003 weights, 60 percent of imports—in dollar
value terms—from the Asian Near East region (Bahrain, Iran, Iraq,
Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria,
United Arab Emirates and Yemen) were crude oil and natural gas,
whereas crude oil and natural gas accounted for only 15 percent of
imports from Canada.
24
The Asia Newly Industrialized Countries region includes Hong
Kong, Singapore, South Korea, and Taiwan.
25
Asian Soybean Rust is a plant disease caused by two different
fungal species. The fungus spores are carried by the wind and can infect
20 plant species in the United States, of which soybean is the most
commercially significant. Yield loss is the main consequence of the
disease because the lesions caused by the fungus lead to premature
defoliation. For more information, visit http://lugar.senate.gov/
reports/RL32225_soy.pdf (visited July 6, 2006).
26

Oil Crops Outlook (U.S. Department of Agriculture, April 2005).

27

Ibid, September 2005.

28
Mark Drabenstott and Jason Henderson, “Katrina and Rita:
Lingering
Effects
on
Agriculture,”
The
Main
Street
Economist:Commentary on the rural economy, October 2005.
29
Scott Kilman “The Katrina Cleanup: Crop Forecasts Raised as
Storm’s Impact is Mitigated,” The Wall Street Journal, Sept. 13, 2005,
p. A11.
30
Scott Kilman and Richard Gibson, “Pilgrim’s Pride Cuts Its
Outlook, As Chicken Boom May Be Waning,” The Wall Street Journal,
Jan. 4, 2006, p. A2.
31
Platts staff, “LME aluminum hits ten-year high, possibly due for
correction,” Platt’s Metals Week, Dec. 5, 2005, p. 7.
32
Businesses are expanding the practice of pricing their products in
foreign currencies in an attempt to hedge against adverse exchange rate
fluctuations. As a result, an increasing number of prices collected in the
IPP’s surveys are originally quoted in foreign currencies. Because the price
indexes published by the IPP are calculated using dollar prices, these prices
must be converted into dollars. During 2005, 3.66 percent of all items in
the Export Price Index were priced in a foreign currency. The consumer
goods (excluding automobiles) category has the highest proportion, 7.62
percent, of all export end-use product categories. The foreign currencies
used most often for exports were the Canadian dollar, euro, yen and
pound. On the import side, 5.45 percent of all items were priced in a
foreign currency. The foreign currencies used most often for imports were
the Canadian dollar, euro, yen, British pound, and Swiss franc.
33
Schneider, “Steel Prices Hurt Auto-Parts Business,” The
Washington Post, 2005, p. E3.