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Figuring it out: The energy question

(Credit: Politirazzi)

By Jeff

Since I am still currently undecided in regards which of the three main candidates I will be voting for (Obama, McCain or Barr), I will periodically be posting critiques of something that one of them said in the previous week. It could either be something I agree with that I don’t think is getting enough attention, or somewhere disagree.

This week is all about Obama. New Energy Czar with two ridiculous statements, one of which is akin to electoral bribery.

First, here’s what he said last week during a campaign speech:

“There are things you can do individually, though, to save energy. Making sure your tires are properly inflated — simple thing. But we could save all the oil that they’re talking about getting off drilling — if everybody was just inflating their tires? And getting regular tune-ups? You’d actually save just as much!”

The right is mocking Obama with tire gauges acting as if Obama’s energy policy exists solely of getting a regular tune up, which obviously isn’t true. The left is defending the comments saying that it’s common sense that you can save gas with inflated tires and better-tuned cars. But neither of that is the true point. The main point of the quote is Obama saying that you can “actually save just as much” from tune-ups and inflated tires as you would from drilling (meaning Offshore and ANWR).

The National Review did the calculations (and you can recheck if you don’t like the source) said that Obama’s math was way, way off.

(continued) Liberally assuming a 10 percent improvement in gas mileage efficiency (other sources say it would only be 3 percent — but let’s go with 10 percent to factor in regular tune-ups) would save consumers between 5 and 6.5 million gallons of gas a day, which ends up saving about 330K barrels of oil a day. ANWR and the Outercontinental Shelf (i.e. “offshore”) have at least 30 billion barrels of oil (I’ve seen some stats which predict closer to 100 billion barrels. Which means that it would take about 250 years of perfectly tuned cars and inflated tires offset the benefit of ANWR and Offshore drilling.

The other, more insulting item, is Obama’s recent blatant pandering bribe for votes. Friday, he announced a plan to offer a $1,000 rebate check (read: outright offer of payola to voters) to families to offset the cost of energy which is to be funded by “big oil” and their “excess profits.”

First, gas isn’t expensive because oil companies are making record profits — actually, wait — first is; what gives the government the right to determine what is “excess profits” on a private industry? Isn’t everyone trying to get the energy companies to innovate and improve their product? What is their motivation to do well if the government is just going confiscate their profits?

Second, gas isn’t expensive because oil companies are making record profits. Oil companies are making record profits because oil is expensive, and their margins (a slim 10 percent compared to most industries — computers, pharma, beverages and most other major industries have over 15 percent margins) are a function of THEIR COST (which is the ever increasing cost of crude oil). This means that in 2007, when the average price of oil was $2.80, the “big oil” companies were making their “excess profits” to the tune of about 25-30 cents a gallon.

This year, it’s around 40 cents a gallon. On that same gallon of gas, federal and state gas taxes in NY are 60 cents a gallon. So what is excessive now? The taxes are flat so as the price of crude oil goes down, the percent of taxes increases.

Third, you want to throw the market in a tizzy, start arbitrarily confiscating profits away from companies and screwing the stock holders by having their dividends cut. Watch every investor flee from the industry when they have no idea if they are going to be able actually have a right to the profits in which their company earned. Or worse, just watch the oil companies raise the prices to offset the foolish “energy rebate.”

It is downright depressing that so many ignorant people will fall for these types of bribes. John McCain’s foolish “tax holiday” was roundly criticized by economists and politicians alike. Hopefully, Obama’s insulting bribe to the electorate will receive the same level of scorn. Obama’s platform is built on being some sort of new politician. There is nothing new about these types of scams to purchase votes from ignorant voters.

Tags: oil production , figuring it out , jeff akston

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