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%!