Nelson Index

AAA

DEFINITION of 'Nelson Index'

The Nelson Index is a measure of the complexity of an oil refinery. Refineries that are higher on the Nelson Index are valued higher relative to their peers. For example, high Nelson Index refineries may be able to refine lower quality crude oil, or be capable of producing higher value end products. Due to their greater complexity, high Nelson Index refineries are more costly to build and operate.

INVESTOPEDIA EXPLAINS 'Nelson Index'

The Nelson Index was developed in 1960 by Wilbur Nelson. Since the details of how a refinery operates are difficult to comprehend without specialized industry knowledge, the Nelson Index provides an easy metric for quantifying and ranking the complexity of different refineries. Based on the Nelson Index, on average, U.S. refineries are the most complex in the world. However, there are an increasing number of highly complex refineries located in other countries.

RELATED TERMS
  1. Oil Refinery

    An industrial plant that refines crude oil into petroleum products ...
  2. Crude Oil

    A naturally occurring, unrefined petroleum product composed of ...
  3. Crack Spread

    The spread created in commodity markets by purchasing oil futures ...
  4. Sweet Crude

    A type of oil that meets certain content requirements, including ...
  5. Sour Crude

    The name given to barrels of crude oil that do not meet certain ...
  6. 1979 energy crisis

    The 1979 energy crisis in the U.S. was an event of widespread ...
Related Articles
  1. Oil And Gas Industry Primer
    Active Trading

    Oil And Gas Industry Primer

  2. Uncovering Oil And Gas Futures
    Active Trading

    Uncovering Oil And Gas Futures

  3. Commodity Prices And Currency Movements
    Forex Education

    Commodity Prices And Currency Movements

  4. Accounting For Differences In Oil And ...
    Fundamental Analysis

    Accounting For Differences In Oil And ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center