World Energy Outlook 2006

y about 60% of the increase in the dollar price. In contrast, the Japanese oilimport
price in yen rose slightly more than the dollar price over 2002-2005.
Chinese oil-import prices followed dollar prices up to July 2005, as the yuan was
pegged to the dollar – a system that had been in place since 1994. With the
adoption of new arrangements, under which the yuan is now tied to a basket of
currencies, the Chinese currency was then revalued upward against the dollar by
2.1%, reducing import prices marginally in yuan terms. In several other
developing countries, currency revaluations have dampened the impact of higher
dollar oil prices to a larger extent. For example, since 2002, the real price of crude
oil imports into India has risen by only about 80% as much as dollar prices.
index (1Q 2002=100)
Figure 11.2: Average Crude Oil Import Prices by Region in Real Terms
and Local Currencies
300
250
200
150
100
50
0
1Q1999 1Q2000 1Q2001 1Q2002 1Q2003 1Q2004 1Q2005 1Q2006
IEA (dollars) IEA Europe (euros)
Japan (yen)
India (rupee)
Wholesale and import prices of natural gas have generally risen in line with
crude oil prices since 1999, reflecting competition between gas and oil
products and contractual links. Proportionately, gas prices increased more or
less at the same rate as oil prices in North America between the first quarter
of 1999 and the last quarter of 2005, actually increasing faster between
2002 and early 2005 due to supply constraints and a surge in demand as
several new gas-fired power stations came on line. US gas prices have since
fallen relative to oil prices. In Europe and Asia, gas prices increased less
rapidly than oil prices, and with a time-lag. Almost all the gas consumed in
continental Europe and Japan is traded under long-term contracts with
oil-price indexation (Box 11.1), but price caps – contractual clauses that
272 World Energy Outlook 2006 - FOCUS ON KEY TOPICS
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