Correlations of Energy-Minerals Prices and Consumer Energy Prices

L. David Roper
http://www.roperld.com/personal/RoperLDavid.htm
2 July, 2016

Introduction

I thought that it would be interesting to see if the prices customers pay for energy are correlated with the market prices for the minerals from which the energy is obtained. The correlation coefficient for perfect correlation is 1; the correlation coefficint for no correlation is 0; the correlation coefficient for perfect anticorrelation is -1.

Correlation of Appalachian-Coal Prices and Consumer-Electric Prices in Blacksburg, Virginia

I have collected the electricity rates paid by Christ Episcopal Church in Blacksburg, Virginia from 2001 to 2009. Since over 80% of electricity in Blacksburg comes from Appalachian coal, I calculated the correlation between Appalachain coal market prices and the electric rates paid by the church. The correlation coefficient is 0.595 .

Correlation of Natural-Gas prices and Consumer Natural-Gas Prices in Blacksburg, Virginia

I have collected the natural-gas rates paid by Christ Episcopal Church in Blacksburg, Virginia from 2001 to 2009. I calculated the correlation between natural-gas market prices and the electric rates paid by the church. The correlation coefficient is -0.374 . That is, they slightly anticorrelate.

Correlation of Crude-Oil Prices and Gasoline Prices

I calculted the correlation between crude-oil market prices and consumer gasoline prices. The correlation coefficient is 0.990 . They highly correlate.

Conclusion

• The correlation between crude-oil market prices and consumer gasoline prices is very high (0.990).
• The correlation between Appalachian-coal market prices and electricity rates in Blacksburg, Virginia is moderatly high (0.595).
• The correlation between natural-gas market prices and consumer natural-gas rates in Blacksburg, Virginia is somewhat negative (-0.374). They slightly anticorrelate.

Minerals Depletion
L. David Roper Interdisciplinary Studies