George’s penny folly

One of the things scientists learn very early in their careers is to develop a sense of order and scale. It’s all very well jabbing away at a handheld calculator, and have it spit out answers to 13 decimal places, but if the problem to be solved doesn’t call for such accuracy, or is based on imprecise input data, what is the point of all those digits? One can often gain a better feel for physical reality by calculating in one’s head or on the back of an envelope, thinking in terms of orders of magnitude (multiples of 10).

Given the rapid rise in fuel prices, order-of-magnitude reckoning is not far off the mark in our everyday domestic realities. It certainly helps when considering a petrol price rise of 15 pence per litre over the last six months or thereabouts, and comparing this with the one penny fuel duty cut announced yesterday by UK finance chief George Osborne, along with a £2bn windfall tax on North Sea oil producers.

Osborne has warned the industry that he will watch fuel prices “like a hawk”, to ensure that the windfall tax is not passed on to consumers. And how does the chancellor propose to control pump prices in a pseudo-free market economy when these alreay vary wildly by location, season and sunspot number? As I spin past petrol stations on my pedal cycle, I often observe price differentials within the space of a few kilometres of 10 pence per litre and more.

By the way, the media report to which I link above is in part a regurgitation of a press release from oil industry lobbyists attempting to spread fear, uncertainty and doubt over Osbourne’s new windfall tax. Tens of thousands of jobs lost as a result of a modest cut in their rapidly rising profits? I guess that one shouldn’t be too hard on the oleaginous PRs when economists and finance ministers routinely get away with making it up as they go along.

When all’s said and done, I’m left wondering about the point of it all. Is George Osborne so bereft of ideas that all the old money Tory and Bullingdonian could come up with is an inconsequential petrol price cut and oil industry windfall tax?

I blame the maths teachers. And not just the underpaid and undervalued state school ones.