Cheap oil feeds into GDP
4. 4. 2016 | Source: BusinessInfo.cz
Drop in crude prices triggered a one-fifth reduction in fuel prices last year.
Thirty eight billion crowns was last year saved on petrol and diesel outlays by households and businesses thanks to the 20-percent drop in fuel prices. The sum is the difference between the fuel spend at last year's prices compared to the prices that held sway in 2014.
At the pump, cheaper petrol reduced the amount spent on filling up by CZK 10bn. Assessing the number of petrolfuelled vehicles in private use, households thus made savings of some CZK 7bn. Where diesel was concerned, the spending reduction reached CZK 28bn, with most of that saving enjoyed by businesses - freight transport runs almost exclusively on diesel while corporate passenger fleets have lately seen a spike in the proportion of diesel-engine cars.
Most of the billions of crowns saved on cheaper freight transport diesel did not, however, end up with the transporters. "Big transport businesses often operate according to contracts containing a fuel price clause. This means that diesel price fluctuations are reflected in the service price," noted Martin Felix, a spokesperson for the ČESMAD BOHEMIA Association of Road Transport Operators. Hauliers have generally come under pressure from customers for price cuts, but they seldom have much wiggle room, added Felix. The road toll fees keep creeping up and some of the fuel savings have had to go towards better pay for drivers, who are in short supply on the market.
Looking at GDP impacts, a team of financial analysts at Česká spořitelna calculated that, while the CZK 38bn saved via cheaper fuels corresponded to 0.8 percent of national GDP in 2015, the less costly fuel expenditure did in fact boost the economy by 0.4 percent. "Our estimate is that households and businesses set aside about CZK 4bn of the total figure, but the rest of the savings were spent on consumption and investments. However, CZK 15bn of that outlay ended up abroad as it was spent on imports, meaning that GDP actually increased thanks to cheaper fuels by the remaining CZK 19bn, or by 0.4 percent," concluded David Navrátil, chief economist at Česká spořitelna.
Year on year, drivers in 2015 consumed 0.4 percent more fuel, buying a total volume of 1.58 million tonnes. The fuel price in itself has a 60-percent influence factor on consumption, according to Václav Loula, an expert at the Czech Association of the Petroleum Industry and Trade [ČAPPO]. The other 40 percent is related to the direction in which the economy is headed. In the case of petrol, the increased consumption merely stalled a continuous decline that stretched over the previous 13 years.
Originally published in E15 weekly, economic and business newsmagazine. Author: Jan Stuchlík