Obama doesn't understand economics

As if it weren't already obvious, here is some additional proof that Obama doesn't understand economics.

"Let me make a point about efficiency, because my Republican opponents - they don’t like to talk about efficiency. You know the other day I was in a town hall meeting and I laid out my plans for investing $15 billion a year in energy efficient cars and a new electricity grid and somebody said, 'well, what can I do? what can individuals do?'

"So I told them something simple, I said, 'You know what? You can inflate your tires to the proper levels and that if everybody in America inflated their tires to the proper level, we would actually probably save more oil than all the oil we'd get from John McCain drilling right below his feet there, or wherever he was going to drill.' So now the Republicans are going around - this is the kind of thing they do. I don't understand it! They’re going around, they're sending like little tire gauges, making fun of this idea as if this is 'Barack Obama's energy plan.'

"Now two points, one, they know they're lying about what my energy plan is, but the other thing is they're making fun of a step that every expert says would absolutely reduce our oil consumption by 3 to 4 percent. It’s like these guys take pride in being ignorant.

"You know, they think it is funny that they are making fun of something that is actually true. They need to do their homework. Because this is serious business. Instead of running ads about Paris Hilton and Britney Spears they should go talk to some energy experts and actually make a difference."

Obviously, there are simple factual mistakes (e.g., the saving from air tires is up to 3 percent of gas used by cars, not of all oil consumption; the up to 11.2 million gallons saved of oil per day (about 267,000 barrels of oil) is just a fraction of the 1.25 million barrels of oil produced from the Outer Continental Shelf (OCS) that McCain is discussing (even if you expand it to included all things that could be done to improve gas mileage)).

So what is the problem with Obama's notion of efficiency? He only includes some costs and not others. There are 250 million cars in the US. Suppose that you would have 150 million cars having their tires checked once a week. Suppose that it takes on average 5 minutes to check the pressure on all the tires (remove the stem covers, check the pressure, fill up the tires with air when needed, put the covers back, clean your hands). If that is done once a week, it would take 750 million minutes a week, or 12.5 million hours. The average hourly wage in the US is now $18 per hour. Including workers not paid on an hourly rate, the number would be much higher. But at $18 per hour time costs on average, that comes to $225 million, $32.5 million per day. If gas prices are $4 a gallon, you would save $44.8 million (11.2 million gallons saved * $4 a gallon). Not a huge difference in the numbers.



Anonymous Anonymous said...

Very amusing and certainly an interesting take. But come on, why make an issue out of this?

Firstly, his statement was delivered with undertones of jest: "...we would actually probably save more oil than all the oil we'd get from John McCain drilling right below his feet there, or wherever he was going to drill." - Clearly Obama does not believe McCain was actually going to drill right below his feet, for example.

Secondly, he doesn't make any concrete, quantitative statement. This clearly was not part of his quantitative presentation / hard economic analysis. Again, this is partially because he was speaking in jest, partially because (I’m assuming) he was speaking on the fly and didn’t have any facts or figures handy.

Thirdly, from the very link you provided the amount of gas saved is higher than you contend in your Obama fact check: “You can improve your gas mileage by around 3.3 percent by keeping your tires inflated.” not the "up to 3" percent you claim.

Fourthly, the major problem here is that people (the RNC in particular) are painting the picture that this is his energy policy. That clearly is not the case, as he was answering the question ‘well, what can I do? What can individuals do?’

I contend McCain wouldn’t have had anything different to say, and at the least would not disagree with Obama. “And could I mention that Sen. Obama a couple of days ago said that we ought to all inflate our tires, and I don’t disagree with that,” he said on the call. “The American Automobile Association strongly recommends it. But I also don't think that that's a way to become energy independent."

Once more, to McCain’s last sentence about this not being a way to become energy independent – “inflate tires. Become independent” is not Obama’s plan the way he is trying to paint the picture.

If we were going to dissect with such precision every statement the candidates made during Q&A sessions, I think both would be in pretty poor shape.

8/06/2008 2:37 PM  
Anonymous Anonymous said...

Oops - made a fairly serious error there myself. Looked at the gas mileage page on the fly and upon further inspection that "up to 3%" figure was entirely accurate. My apologies.

8/06/2008 2:41 PM  
Anonymous Anonymous said...

You made a computation mistake.
100M cars @ 5 minutes each.
5 min = 1/12th hour

500M minutes / 60min/h = 8.3M hours.

100M cars / (12 slices of 5 minutes /hour) = 8.3M hours.

but 500M minutes / 12 = 42M

You divided by the wrong divider.

8/06/2008 7:09 PM  
Blogger John Lott said...

Dear Anonymous:

Thanks for your comments.

1) Obama may have told a joke during this extended discussion, but it was pretty clear he had a point to make and he has used this response a few times now to defend his opposition to drilling for more oil.

2) It wasn't on the fly. He made this suggestion last week and was called on it, so he made it again and again. That suggests some thought. He would have known that his response would get attention.

3) You already conceded this.

4) No one is claiming that this is Obama's entire energy plan. Cite for me either a statement from McCain or the RNC claiming that. They are simply saying that this is an example that Obama is out of touch.

5) McCain has said that it is fine for people to do this, but he hasn't brought this up as a replacement for drilling for oil.

Thanks again.

8/06/2008 7:13 PM  
Anonymous Anonymous said...

Under-inflated car tires also cause car accidents. That's why the U.S. government began mandating tire pressure monitoring systems in all new cars:


The Firestone recall in the United States in the late 1990s which was attributed to more than 100 deaths from rollovers following a tire tread-separation, pushed the Clinton administration to publish the TREAD Act. This act mandates the use of a suitable TPM technology in order to alert drivers of a severe under-inflation condition of their tires. This act affects all light motor vehicles (<10,000 lb) sold after 1 September 2007.

8/07/2008 11:12 AM  
Anonymous Anonymous said...

I am fairly convinced that the 'save gas by proper tire inflation' would be next to none at this point in time.

It seems everyone that I know, since a gallon of fuel has pushed beyond $3.50 a gallon is getting their oil changes, filters checked, tires checked on a very frequent basis.

As for tune-ups, since 1986 most cars no longer get tune-ups. Rotors, caps, plug-wires are a thing of the past. Even my Jeep Wrangler doesnt have spark plug wires or a rotor/cap.

8/08/2008 10:12 AM  

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