ENPI: Frequently Asked Questions
Energy Price Impulse Index
Oil moves everything. ENPI measures how hard.
ENPI captures the inflationary and growth impulse from energy price movements — measuring not just whether oil is high but whether its trajectory is creating positive or negative economic shocks.
What does ENPI measure?
The Energy Price Impulse Index (ENPI) measures the economic impulse generated by energy price movements — the rate of change and directionality of crude oil, natural gas, and refined product prices relative to historical norms. A high ENPI indicates energy prices are rising sharply relative to trend, creating an inflationary impulse that compresses consumer real incomes and squeezes corporate margins. A negative ENPI indicates a deflationary energy impulse — falling prices that relieve inflation pressure and boost consumer spending power.
Why is the impulse more important than the level?
The economic impact of energy prices comes primarily from change, not level. Consumers and businesses adapt to a stable oil price — whether $60 or $90 — but a rapid move from $70 to $110 creates acute short-term pain that shows up in CPI, producer prices, consumer confidence, and corporate cost structures. ENPI captures this dynamic by measuring the first and second derivatives of price change rather than simply the level, making it a leading indicator of inflation surprises rather than a coincident one.
How does ENPI relate to CPI and Fed policy?
Energy prices account for roughly 7-8% of the US CPI basket directly, and have significant indirect effects through transportation and production costs. Sustained positive ENPI readings (rising energy) have historically corresponded with upside CPI surprises 4-8 weeks later, which in turn affect Fed policy expectations. The 2021-2022 energy price surge was the dominant driver of the inflation surge that prompted the most aggressive Fed tightening cycle since the 1980s. ENPI gives an early read on that dynamic.
Does ENPI cover natural gas and electricity?
Yes — ENPI is a composite that includes crude oil (WTI and Brent), Henry Hub natural gas, and refined products (gasoline, diesel). The weights are calibrated to their relative importance in the US energy consumption basket. Natural gas receives higher weight during winter months when heating demand dominates, and the index is seasonally adjusted to distinguish between conditions-driven and structural price changes.