Efficacy of Using Producer Price Indexes for Bulk Chemical Prices in Student Design Projects

Abstract

Engineering students are being asked to work on real-world projects and need to access accurate cost information for their design projects. In the case of chemical engineering and related disciplines, capstone courses often require designing industrial processes or a chemical plant involving bulk chemical prices for both feedstocks and products. A lot of chemical pricing information was available in trade magazines; however, bulk chemical prices are increasingly difficult to locate as producers of that information have reduced the availability and further monetized the information over the last 15 years. The resulting information sources containing chemical prices often cannot be acquired by academic libraries due to cost or licensing terms. In cases where current chemical prices are not available, one could use a Producer Price Index (PPI) to adjust an older price to current levels. Using older prices and adjusting to current levels allows students access to a much larger source of chemical prices (i.e., older issues of trade magazines). Using the PPI to adjust chemical prices will be reviewed. In theory, adjustments using a PPI should provide reasonable estimates of chemical prices. To determine the efficacy of this approach, this study examined price adjustments from two chemical pricing sources for 2, 5, 10, and 15-year intervals for a group of industrial chemicals to determine the efficacy of this approach. This study then discusses the relative merits and limits of using PPIs to adjust chemical prices to assist students with their design projects.