Energy Reflation Impacting unit COGS
Energy Deflation
Prices of energy flowing into upstream (Stage 2,3) and downstream (Stage 4) production have decline 20-40% in the last couple of years.
We’re starting to see a reversal since late Fall 2024.
Which types of businesses have benefited from the deflation? Which are feeling the brunt of the reflation?
Goods Producers
In the last couple of years, downstream (Stage 4) goods producers saw unit COGS down 30% and upstream saw 40% (Stage2,3)
Those who benefited the most are not seeing their costs turn upward the fastest. Upstream energy related unit-COGS up 23% in just the past few months.
Service Producers
Downstream service providers didn’t have much energy-related unit-COGS relief, but upstream unit-COGS fell a whopping 40-50%
None of the service providers are feeling the energy pinch…for now