- Q: What is the effect of panic buying fuel to the UK economy?
- As suggested by @SturdyAlex by panic buying petrol, there could be a positive effect generated on the UK GDP figures for Q1 2012. How to estimate that effect?
- The Government's Statistics office seems to only have most recent statistics from June 2011 relating to fuel purchases to the end of 2009 - which is quite amazing, as I'd have thought that these statistics were generated principally from the forecourt tills and central systems of the petrol retailers or from payment systems for commercial drivers.
- However, this BBC article opens with these two sentences:
- "Drivers have cut their petrol consumption by more than
- 15% since the credit crunch and the recession.
- The AA has calculated that petrol sales in the first
- six months of 2011 were 1.7bn litres less than in the
- same period three years ago."
- From this we can get a handle on the total consumption for the first half of 2011:
- 15% drop H1 2011 vs H1 2008 is 1.7Bn litres
- So... 1st half 2011 in total would be 11.33Bn litres
- Presume (and this maybe a wonky presumption) that the 11.33Bn is split equally over Q1 & Q2 2011.
- So each quarter is: 5.67Bn litres
- And each quarter is 13 weeks gives: 435.9m litres per week
- Now let's just presume that Q1 2011 and Q1 2012 are broadly similar (this may also be a problematic assumption), and that the current "jerrycandered" fuel panic has pulled one week of UK drivers purchases forward by one week - from week 1 of Q2 2012 into week 13 of Q1 2012.
- 435.9m litres x UK fuel tax (£0.5795): £252.6m
- and add VAT at 20%: £50.5m
- Total: £303.1m
- additional revenue pulled-forward from Q2 into Q1.
- The timing of Easter becomes important too - drivers would be expected to be buying more petrol in the run-up to Easter. This calculation presumes an even demand-distribution across the two quarters, and if Easter were to have an effect, it would be to increase demand, and should increase the pulled-forward demand and calculation above.
- There's an additional source of revenue: Channel 4 News revealed in a report this evening that UK drivers have an average of 1/3 of a tank of petrol in their cars at all times, and that this is expected to increase - "...the government says it wants to get drivers into the habit of having their tanks full, not to the normal 1/3 level, so there's more petrol out there if the strike comes." (3m47s in ).
- There are 31m cars in the UK and say the average tank holds 60 litres. Now for a bit of "finger-in-air", let's conservatively guess that the average fill will increase from 1/3 to 1/2 or 10l per car, 310m extra litres purchased.
- 310m litres x UK fuel tax (£0.5795): £179.6m
- and add VAT at 20%: £35.9m
- Total: £215.5m
- If drivers do follow the government's hopes and increase from 1/3 to full tanks (this is obviously impossible as you'd never be able to drive anywhere, but hey-ho) the total calculated above would increase 4x to £862m.
- Now there are a few further assumptions lurking in here:
- 1) Farm vehicles are taxed at a much lower rate, but there are a lot fewer of them (no evidence, but they can't compare to the total of 31m cars)
- 2) The increase in in-tank stored fuel in cars occurs immediately. It won't, and there's an element of repetition in the two calculations, as presumably the extra panic buy would already include whatever people are increasing their in-tank stored fuel by.
- 3) Lorries not included. This is even harder to get a grasp on - it could be 450,000. Whether road haulage companies would increase their in-vehicle carried stock of fuel - I'd suggest no, as they will be refilled between each journey/load carried. However, they may carry their own on-site storage tanks, and they are likely to increase temporarily the fuel stock stored in them. But getting a handle on this has been set aside for this finger-in-air calculation.
- Even with those caveats, the increase in Q1 2012 tax revenue is likely to be somewhere between £215.5m and £303.1m and could even edge-up further to the sum of the two: £518.6m.
- And if drivers were to run their cars with full tanks, the increase in Q1 2012 revenue could be between £303.1m and £862m, and edge-up to the sum of the two: £1.17Bn.
- Though I'm not an economist; ymmv.
-  http://twitter.com/sturdyalex
-  http://sturdyblog.wordpress.com/2012/03/28/why-would-the-government-want-you-to-panic/
-  http://www.statistics.gov.uk/hub/release-calendar/index.html?newquery=*&uday=0&umonth=0&uyear=0&title=Road+transport+fuels+consumption+at+local+authority+level&pagetype=calendar-entry
-  http://www.bbc.co.uk/news/business-15176330
-  http://en.wikipedia.org/wiki/Fuel_tax#United_Kingdom
-  http://www.channel4.com/news/lives-at-risk-if-fuel-strike-goes-ahead-says-minister
-  http://www.telegraph.co.uk/motoring/news/7563297/Number-of-cars-declines-for-the-first-time-since-Second-World-War.html
-  This is from the top of my head. A Ford Focus has a 13 gallon / 60 litre tank:
- and I think is a pretty good candidate for the average car on the road in the UK.
-  http://www.commercialmotor.com/latest-news/the-number-of-trucks-on-the-road-goes-down
Some calculations around 'Petrol Panic!'
cjjmccray Mar 28th, 2012 300 Never
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