Monday, August 18, 2008

This Is Just Stupid

Ok, I've never been a big fan of Newt Gingrich, for any number of reasons, but this is really just stupid. Newt is arguing, in apparent seriousness, that

Well, I got a very funny e-mail from a retired military officer in Tampa who pointed out that most tire inflation is done at service stations and you pay for it. And it’s actually a higher profit margin than selling gasoline. So Sen. Obama was urging you to go out and enrich Big Oil by inflating your tires instead of buying gas.
Let me make this simple so that even those with the intellectual capacity of a Newt can understand.

1 Big Oil is not enriched by profit margin, it is enriched by profits. Under any normal set of circumstances you will buy very little air from Big Oil (or anyone else) by keeping your tires inflated. So even with a huge profit margin, Bit Oil is going to get four, maybe five, dollars from you in a year. If it is much more than that, you need to patch or replace your tires.

2 By inflating your tires you use less gas. This, though it may have a smaller profit margin for Big Oil, is a much bigger source of revenue. You likely spend two to three thousand dollars a year on gas. (Note that the smaller figure for gas, $2000 is much bigger than the larger figure for air, $5).

3 If your savings from inflating your tires is even 0.1% of your fuel consumption (and experts suggest it might be more like 2%), you will buy $20 dollars less in gas.

4 Note that for an additional $5 of enriching Big Oil, you spend $20 less on Big Oil for a net loss to Big Oil of $15. Big Oil loosing $15 does not enrich Big Oil.

5 Note to Newt. That $15 figure was obtained by assuming a rediculously low fuel savings for the consumer. If you were to actually read and comprehend this it would be clear that the expected savings for the consumer (and loss to Big Oil) would more likely be about $400. Loosing $400 per consumer is not going to enrich Big Oil

6. This is actually an important point. We on the left do not actually care that much about whether or not Big Oil (or anyone else gets enriched). We are currently rather ticked at Big Oil because
  1. it profitability depends so much on public assistance (the military and State Department in the Mid East, dumping CO2 into the atmosphere, oil spills off shore, etc.)
  2. is so huge in spite of its dependence on public assistance
  3. its whining about how much more public assistance it needs
so we aren't too sympathetic to its concerns.

But if Big Oil came up with a huge new, high profit margin technology, that would double everyone's gas mileage, we on the left would be thrilled even if Big Oil became super hugely wealthy.

Let me put it this way. Big Oil becoming wealthy, we don't much care one way or the other. Big Oil becoming wealthy by dumping crap into the environment free of charge bothers us. Can you see the difference.

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