Energy prices used in the S&P Goldman Sachs Commodity Index (GSCI) ended 2021 59% higher than the first trading day of the year, the Energy Information Administration (EIA) reported.
The price increases were largely driven by increased demand from the initial phase of the global economic recovery from the Covid-19 pandemic.
By comparison, most of the other commodity indices included in the GSCI were up about 20 percent.
While the precious metals index was the only one to decline, the GSCI energy index more than doubled the industrial metals index on a percentage basis during 2021, the next highest price change for the group of commodity indices. .
The GSCI is a commodity index that tracks the performance of world commodity markets.
Also, the index is a weighted average of commodity prices, and the index updates the weight it assigns to each product each year.
In 2021, the energy index pool made up 54% of the GSCI, and two crude oil benchmarks, West Texas Intermediate (WTI) and Brent, accounted for approximately 70% of the weight in the energy sector index.
For its part, WTI crude oil makes up the majority of the overall GSCI at more than 21 percent.
Prices in the energy commodity futures markets increased significantly throughout 2021.
For example, the futures price of RBOB (a reformulated grade of gasoline used as a benchmark for gasoline trading) increased by 67% during 2021. The only commodity included in the GSCI that increased the most was coffee, whose futures price it rose 81% during 2021.
Among energy commodities, the prices of petroleum products such as RBOB and ULSD (ultra-low sulfur diesel, which is used as a benchmark for heating oil trade) increased the most during 2021, 67 and 64%, respectively.
Crude prices such as WTI (62%) and Brent (55%) increased slightly less.
Diesel futures prices (named after ULSD in Europe) climbed 54% during 2021.
Natural gas prices increased the least among energy commodities, although 38% is still a relatively large increase.
Several factors contributed to the rise in energy commodity prices throughout 2021, including weather changes such as the February winter frost and Hurricane Ida; increased demand for gasoline and diesel; and the increase in demand for crude oil and natural gas at a faster rate than the increase in production.