Price deflator for energy (equals 1 in 1997). The energy deflator is based on each industry's expenditures on seven types of energy: electricity, residual fuel oil, light oils, liquefied petroleum, coal, coke, and natural gas. Previous updates used information for six types of energy (the distillates category was recently split into light oils and liquefied petroleum).

As with the materials cost deflator, we combine price indices for the different energy types with information on each energy type's share in the industry's total energy expenditures Data on energy expenditures for six fuels (excluding electricity) come from 2002 Manufacturing Energy Consumption Survey (MECS). The data on energy expenditures for six of the fuels in the current update (excluding electricity) come from the 2002 Manufacturing Energy Consumption Survey (MECS), available at the Bureau of the Census website (http://www.census.gov). The ASM data provide information on electricity and non- electricity energy spending, and the MECS data are used to disaggregate each industry's non-electricity spending share into the share of each of the six non-electricity energy types. There are a number of missing values in the MECS data. Extremely small values (less than 0.5), as well as values with high relative standard error (more than 50%) are withheld from the official MECS release by Census. Additionally, some values are withheld to avoid disclosing information for individual establishments in cases where an industry relatively few plants. The extremely small values are replaced by 0.1. Since MECS reports totals by industry and type of energy, it is possible to impute the few remaining missing values at the 3-digit NAICS level by running a cross-check against the unassigned residuals from those totals.

MECS data contain a full set of 3-digit NAICS industry codes, but little industry detail beyond that. Only a handful of 4-, 5-, and 6-digit NAICS industries are included in the MECS, and the cross-check approach cannot be used to fill missing values in those series. Therefore, all 4-to-6 digit NAICS industries with missing values have to be discarded, and the next higher level of detail is used in the construction of the energy deflator. Price indexes for each non-electricity energy type are obtained from the Bureau of Labor Statistics database (http://www.bls.gov), using the industrial price indexes. The codes of the extracted BLS variables are:

• WPU051 Coal
• WPU052 Coke oven products
• WPU0532 Liquefied petroleum gas
• WPU054321 Industrial electric power
• WPU055321 Industrial natural gas
• WPU0573 Light fuel oils
• WPU0574 Residual fuels

Since the 1996 update, the WPU052 Coke oven products series has been discontinued. Thus, the coke price data used here are extrapolated from coal prices. Electricity prices are calculated from the industry- specific electricity consumption and expenditures data in the ASM tables, where available, and otherwise taken from the national-average values.