Having just spent the last hour and a half shredding my 00/01 and 01/02 annual business and personal accounts and checking every reciept for my credit card number (printed, I might add, in full on the vast majority of them), I’ve discovered a surprisingly interesting fact…

In January 2001 I was paying about 80 pence per litre for unleaded petrol.

Checking back over my reciepts for the last tax year 07/08, I see I was paying back in the beginning of January this year about 100 pence per litre . Yes, less than six months ago.

And now, with oil prices reaching record highs and our fuel going up almost weekly, I’m paying here in Woking, Surrey, very nearly 120 pence per litre.

So, (and this is in no way a scientific study, just my personal observations) it took about seven years (Jan 01 - Jan 08) for unleaded petrol at the forecourt to rise in cost by 20 pence and then less than six months to rise by another 20 pence!

Okay, a bit of calculation on my part here: Using the figures quoted, a bit of prediction, and extrapolating from them using percentages, the price of unleaded petrol at my pump has been rising by 25% in 8.4% of the time span.

Here’s the maths:

• 80p (01 Jan 01) to 100p (01 Jan 08) is a 25% increase in 7 years. (2556 days)
• 100p (01 Jan 08) to 125p (01 Aug 08 - by extrapolating the increases so far this year) is a 25% increase in just 7 months. (214 days)
• ie: the same percentage increase (25%) occurs in 8.4% of the time. (214/2556)*100 = 8.4%

Therefore my petrol increased by the same percentage (25%) in 8.4% of the previous time span.

So here’s the scary bit…

If this is, in any way, some sort of perverse exponential trend and the maths can hold true for a third time, ie: unleaded petrol rises by another 25% in another 8.4% of the previous time span, then assuming 125p on August 1st (it has been rising at an average rate of 0.117 pence per day since 1st Jan 08), following the model I’ve explained above, unleaded petrol will have risen in price again by 25% in 8.4% of 7 months (ie: 214 days), which will be just 18 days after August 1st.

So, using what I will now christen the “Paul’s Law” of Petrol Prices ie a 25% increase in 8.4% of the previous measured time span, here’s my wacky prediction…

I predict that on Tuesday 19th August, 2008 the price of unleaded petrol at the BP service station in Goldsworth Park (Woking) will be at or above 155.9 pence per litre.

A bit of a laugh, I know, (and boy, I’ll be famous if my prediction does come true!) but there is mention of prices reaching £1.50 per litre by September, so I’m not that far off really if those predictions are anything to go by!

And if I’m anywhere near right, and “Paul’s Law” does hold true for 3 times in succession, you’d better hope and pray it fails on the fourth!

It will of course have to fail, else it would mean a 25% rise to 195p in 8.4% of the time span of 18 days; ie: about one and half days later!

Silly, yes, but maybe now you can see the stupidity of exponentials; you simply can not keep increasing your rate of increase.

Sooner or later, and in terms of house prices, oil prices, food prices, petrol prices, in fact production of anything, hell, the whole bloody world economy for that matter, something somewhere has to give, and give in a big way, ie: crash!

- Houston, we have a problem.

This entry was posted on Saturday, June 21st, 2008 at 3:59 pm and is filed under Misc Posts. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.