Tuesday, May 13, 2008

Election Politics for the "bad-at-math" taxpayer (and Journalists)

In the news today is that our esteemed political leaders want to suspend the current Administration's practice of adding to the USA's Strategic Oil Reserve.

The argument being promoted is that those 70,000 barrels/day are part of the reason why gasoline is approaching $4/gallon.

Well, let's apply some classical "Supply & Demand" examination of this claim:

As per the US DOT (URL above), the amount of crude oil imported in 2006 (the 2007 numbers will be updated in June 2008) was...

10,118,000 barrels/day

And US Net Petroleum Imports were:
12,390,000 barrels/day

Plus there was also U.S. Crude Oil Production:
5,102,000 barrels/day

So we're asking about the significance of 70,000 barrels/day in the contect of (12.39 million + 5.1 million) used per day:

70,000 / (12,390,000 + 5,109,000) = 0.004 = 0.4%

Assuming that the difference results in a linear cost savings,
0.4% of $4 is a whopping 1.6 cents per gallon

Why gosh! I'll only need to buy ~200 gallons of gas in order to save all of $3.

If $3 is going to make/break your life in 2008, drop me an email explaining how: I'll consider sending you $5 and you can name your children after me and make me your write-in candidate in November. At least McCain's and Hillery's "18 cent Fed Tax" moratorium was willing to spend all of $30 in their attempt to buy your vote.

So the conclusion is here that the math shows that the crude oil deposits into the Strategic Oil Reserve is a non-issue in the marketplace: the total change potential is for less than one half of one percent. Thus, this is simple election year wrangling in the form of a "Strategic Political Topic Reserve", which the Lawmakers will use to make themselves look like they're busy working hard for you, the common taxpayer.

But unfortunately, as the saying goes, don't confuse Activity with Progress.

And let's not forget our Journalists out there: how many of them are bad at math and won't think to run the numbers?


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