SECTION 3. INFLATION

ADJUSTMENT FACTOR AND REFERENCE PRICE

.1 Inflation Adjustment . The inflation adjustment factor under § 45I(b)(2)(B) for calendar year 2019 is 1.3015.

.2 Reference Price . The Secretary’s estimate of the calendar year 2018 annual average wellhead price per Mcf for all domestic natural gas under § 45I(b) (2)(C)(ii) was calculated by applying the Producer Price Index commodity index for “Natural Gas from the Wellhead” (WPU053101051) ¹ published by the Bureau of Labor Statistics (BLS) as part of its Producer Price Index program, to the 2017 annual average wellhead price ($2.68) published in Notice 2019-37, 2019-37 I.R.B. 629. The annual Producer Price Index commodity index for natural gas published by the BLS was 83.4 in 2017 and 79.3 in 2018, which implies a ratio of 2018 to 2017 average wellhead prices of 0.951 (79.3 / 83.4). Therefore, the Secretary’s estimate of the calendar year 2018 annual average wellhead price per Mcf for all domestic natural gas is $2.55 per Mcf (0.951 x $2.68 per Mcf).

For years after 2018, the Secretary intends to continue calculating the reference price by application of the Producer Price Index commodity index for “Natural Gas from the Wellhead” (WPU053101051) published by the BLS to the previous year’s reference price.