Linux Server Wrangler (Middle-Weight Class) /w touch of DevOps. Ex-Projectionist, Geek, Android Abuser & Gravely Gay! ;) Opinions noted here are mine, all mine!

fuel-crisis-is-all-about-gdp

It’s been interesting to see the mountain that is the #FuelCrisis build out of a mole-hill. What was just a vote to position themselves for a strike, should the fuel delivery drivers not accept the negotiations on their pay & conditions, has lead to shortages of petrol and diesel across the country when there was no reason for it.

But, I don’t think this is a coincidence. Yes, I’m being skeptial here, but a few days ago the OECD predicted that UK growth would be negative in Q1/2012 by around 0.2-0.3%. The UK’s GDP for 2011 was around $2.48 trillion, and assuming a rate of ~$1.60/£1 for much of 2011, GDP can be calculated as £1.55 trillion in native currency. Therefore, for a contraction of 0.2% in Q1, we need to lose ((£1.55t/4)*0.002) or £775million.

The AA have said that there is a potential for 750million additional litres of fuel to be sold should everyone convert a half-full tank to a full one, while the normal sales of 90million litres per day has risen by 172% for petrol & 77% for diesel  (so approx 103.5millions extra litres per day based on the same split below). Given this started on March 28th, we have 5 days this quarter over which there could be panic buying, giving a maximum potential of, say, 517.5million litres.

With Petrol, as of yesterday, at around £1.409, and Diesel at £1.471, and using an old statistics that more diesel is now sold than petrol, I’ll assume here a 40/60% spilt, giving an average price of £1.446 per litre.

Therefore, 775million litres sold, at £1.446 per litre gives £748 million additional revenue for this quarter alone. That has the potential to increase GDP by up to 0.2% for this quarter, and save a double-dip recession that our government is so keep to avoid at all costs, lest the look like failures in managing our economy!

Whether this is the truth is a whole different matter, but it’s an interesting spin on the whole situation none-the-less!

As a quick breakdown…

GDP:
($2.48t @ £1.60/£1) ÷ 4 = £387.5b/Q
                ∴ 0.2% ~= £775m

Fuel Sales: 90m litres/day
  Petrol: 40% = 36m; +172% =  62.0m extra
  Diesel: 60% = 54m;  +77% =  41.5m extra +
                     Total = 103.5m extra
                   5x Days = 517.5m

Extra Sales: 517.5m @ £1.4462 = £748m
  Petrol: £1.409 × 40% = £0.5636
  Diesel: £1.471 × 60% = £0.8826 +
                 Total = £1.4462

GDP Increase: £0.748b ÷ £387.5b =~ 0.19%

Update: Didn’t notice that the 172% increase was for Petrol only, so I’ve added calculations for a 77% increase in diesel as well. Still works out that it would increase GDP by 0.2% rather than 0.3%!


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