10. Trying to lock up the Irish Catholic vote with an O’Bama - Kerry ticket.
9. Michael Dukakis won’t return Obama’s phone calls.
8. Last week at Whole Foods, Obama ordered an arugala salad with Heinz ketchup.
7. Obama picked up windsurfing in Hawaii.
6. Obama voted for Kerry before he voted against him.
5. Last week Obama said “if you work hard and get an education, you can become the democratic nominee. If not, you can get stuck as VP.”
4. Why have one crazy spouse on the ticket when you can have two?
3. Obama keeps mentioning that his VP pick must pass the “global test”.
2. Nothing says “Change we can believe in” like a 65-year old billionaire white guy with 25 years in Congress.
1. When Obama said there were 57 states, he was thinking ketchup varieties.

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.

First, as Jake Tapper points out, this is not exactly what Obama said “the other day.”  In fact, he said, “we could save all the oil that they’re talking about getting off drilling if everybody was just inflating their tires.” (Note the background laughter in the audience after he says this.  Perhaps someone at the pep rally was also proud to be ignorant.)

There’s something more devious, however, than Obama’s merely recasting what it is he said to make him look less of an idiot.  By slight of hand, he also converts a 3-4% increase in fuel economy to a 3-4% decrease in demand, and puts words in the mouths of experts who never said any such thing.

So what would this air inflation savings really mean?

1. Only about 1/3 to 1/4 of drivers have underinflated tires.  That means that the average fuel economy increase would only average out to 1-1.33%. (taking the pro-Obama number of 1/3).
2. Fuel economy is inversely proportional to fuel demand.  Put another way, a 4% increase in fuel economy is not a 4% decrease in demand.  For example, let’s say your car has under-inflated tires and gets 20 mpg as is.   If you drive 1000 miles a month, you use 50 gallons.  You then inflate your tires to get a whopping additional .8 mpg (a 4% increase).   It now takes 48.08 gallons (a savings of 3.8%).  This effect is even high as your percent increase increases.  (For example a 10% increase is only a 9.1% reduction in fuel demand.  A ).  It may seem like a small difference, but .2% of total fuel consumed in the US is 14.6 million barrels per year.  In any event, this 3.8% reduction in demand only applies to 1 out of every 3 drivers (at most), meaning it’s really a 1.27% decrease in overall demand for gasoline.
3. Finally, gasoline is not the only product made from crude oil.  Jet fuel, plastics, lubricants, waxes, asphalt and other products are made from crude oil.  Gasoline is only about 50% of a barrel of crude oil, so a 1.27% decrease in our gasoline demand may not, necessarily, result in a 1.27% decrease in overall demand for crude oil.  That would depend on what is driving demand for crude.  My guess is that gasoline and deisel are the drivers, but that may not be true year-round.

The point here is that no expert has ever said anything of the kind.  Just like Clinton’s ridiculous claim that “Russian missles are no longer pointed at our children,” this comment is made of thin air.

While it’s true that Exxon’s net profits of $11.7 billion is a record quarterly profit for any company, the numbers are far more interesting.  Mark Perry at iStockAnalyst points out that Exxon paid 3 times that amount in taxes already!

As I noted briefly in his comment section, if you simplify Exxon to be solely a gasoline vendor, here is how the average $4 per gallon price breaks down:

That means, all tolled, the government (federal, state and local) receives $1.23 per gallon and Exxon receives $0.31 per gallon.

So, who’s making the windfall profit?

By the way, the $2.46?  That mostly goes to foreign governments who own the only lands our Congress will allow us to drill.  I’m sure that will end well.

UPDATE: By the way, if Obama’s $50 billion stimulus plan were enacted, the taxes would (as they are now) merely be passed on to the consumer.  Meaning that, assuming for simplicity sake, everything else remained constant, Obama’s $50 billion would add $1.32 to the price of gasoline.  Even if you assume Exxon’s profits went to zero, the price of gas would instantly go up to about $5.00 per gallon.

$5/gallon gas in January?  Yes We Can!

UPDATE #2:  One reader pointed out that Obama’s plan would spread his “windfall profits tax” over 5 years (and presumably more oil companies than just Exxon).  That would only increase the price to about $4.30 or so.

McCain and ABC’s Jake Trapper have rightly pointed out that this is Obama playing the race card.  No person speaking on behalf of Senator McCain or President Bush has even remotely mocked or referred to Obama’s appearance, skin color, the phonetics of his name or his racial history.  What they have done is criticized his woeful lack of experience.

Not one to ever stick to a statement, when questioned, the Obama campaigned feigned surprise, claiming, incredulously, that Obama was not saying anything about race:

Obama spokesman Robert Gibbs said “What Barack Obama was talking about was that he didn’t get here after spending decades in Washington,” Gibbs said. “There is nothing more to this than the fact that he was describing that he was new to the political scene. He was referring to the fact that he didn’t come into the race with the history of others. It is not about race.”

Really? There are 8 U.S. presidents on currently circulated currency.  Only two of them have more than 10 years of political experience in washington (and only then if you count Jefferson’s Ambassadorship to France as time he spent as a “Washington insider”):

Arguably, the $2 bill and the silver half dollar are not even in common circulation.  I have excluded military service, as I don’t think anyone could reasonably call Washington, Ike, Grant (or their equivalent in General Patreaus) “Washington insiders” simply because they commanded the military in war time.

Of course, the flip side of the coin is that, if Obama (God forbid), is elected president, he will have served 4 years in the Senate, making him more of a Washington insider than any president on currency (other than JFK and Thomas Jefferson).

In any event, Obama is claiming that properly inflating tires would have a significant impact on gas prices.  Let’s take Jim’s assumptions and see:

Assuming:

• The average commuter commutes 33 miles per day;
• The average car gets 24 mpg (unlikely, but okay);
• Improper tire pressure decreases efficiency by 2.5 mpg (average of 2-3 mpg);
• And 1 out of 3 commuters has improper tire pressure.

Take three random commuters: two travel 33 miles each at 24 mpg (1.375 gallons per day) and the other at 21.5 mpg (1.53 gallons).  The evil, unAmerican commuter is wasting .16 gallons per day.

To put into perspective, this means that uninflated tires increase domestic demand by .16 gallons for every 4.125 gallons.  (All three commuters with properly inflated tires would use (1.375 * 3 = ) 4.125 gallons.)   Put another way, this is an effect of less than 4% (.16 / 4.125).

Assuming you believe in the law of supply and demand, a 4% decrease in demand should correspond to at most a 4% decrease in price.  This ignores effects like stockpiling and the cost of the federal beauracracy needed to ensure compliance.  If the average price of gas is now roughly $4.00 per gallon, a 4% decrease would make it $3.84, saving $.16 per gallon.

To sum up, forcing every motorist to properly inflate their tires would save, at most, $.16 per gallon.

In contrast, the federal tax on gasoline is $.184 per gallon.  Wasn’t there a candidate who said that eliminating this tax was a “typical Washington gimmick” that wouldn’t amount to any real savings?

We were having Chinese takeout Friday night and Sedona was peacefully sitting in her bed across the room. After we had eaten, the wife asked me to give her a biscuit. Thinking she meant the fried lo mein noodles, I grabbed one and handed it to the dog. Several “what did you just do”’s later and ever since, we realized that Sedona seemed to be silently singing her new lament:

Some–times, I get fed at the ta-ble.
Not ev’ry time, but it happened one night.
I’ll wait here, as long as I’m a-ble.
And when they feed me, I’ll know I was riiight.

When a market participant decides to buy (or sell) a futures contract on oil, they are betting that the future price will rise (or fall).  These “evil, manipulative speculators” are people who use oil or gas and need to manage their risk.  For example, if you run an airline, a large portion of your cost is the cost of fuel.  Unfortunately, there is no market for managing the risk of refined Jet-A fuel, so you have to rely on the proxy of crude oil.  For example, let’s say the price of oil on July 1, 2008 was $140 per barrel.  You believe the price will go up in a year, so you buy several contracts that will, theoretically let you buy oil in a year at today’s price.  If, on July 1, 2009, the price of oil is $200 per barrel, you have a piece of paper that allows you to buy a barrel for $140 and the other party makes up the difference.  If, on the other hand, the price goes down to $100 per barrel, you have to pay $140 (in reality, you pay $40 to the counterparty and no oil changes hands).

So, if your company uses a lot of oil, and you’re worried the price will go up, you would buy a lot of these contracts.  If the price does, indeed go up, you have the “profits” from the future contracts to offset the increased cost.  In other words, you enter into 10,000 of those contracts, your cost of jet-A goes up by $400,000, you can offset that cost by the $400,000 you receive from the futures contract.  As you (hopefully) can tell from my description, no where in the futures market is the price of oil manipulated.  People are speculating (that’s a Harvard word for guessing) about whether the price will go up or down, but no oil changes hands.

This is very similar to betting.  I can assure you from personal experience that betting on a team to win will in no way effect their chances of winning.  If Harry Reid were right about this, the favorite would win every sporting contest.  (And his home state of Nevada would lose a ton of legal and illegal revenue).  There is no economist that I’m aware of who has ever said that speculating has an impact on price.  Indeed, as the Wall Street Journal pointed out, when the federal government banned commodity trading on onions the result was a disaster.  When market participants could not manage their risk, prices became more volatile, not less.  Learning from history, it seems, is not a part of the Democratic agenda.

Separately, Chuck Schumer (D-umbass) and senior senator from New York, decided he wanted to collapse a bank, apparently to prove he could do it, or more cynically, to advance the leftist anticorporate agenda.  His public letter questioning the solvency of Indymac led to two weeks of frantic withdrawals by depositors.  After the federal government needed to step in on Saturday and take over the bank, Schumer, surprising no one, tried to blame Bush.  after causing the bank collapse, Schumer charged that president Bush had “blamed the fire on the guy who called 911.”

This is how stupid or dishonest Chuck Schumer is.  Either he is so dumb that he doesn’t realize that openly questioning the solvency of a bank would cause its depositors to withdraw their money, or he is so dishonest, he believes that you are so stupid that he can get away with it.  When a sitting U.S. senator (frequently referred to as a failed lawyer) on the senate banking committee openly questions the solvency of a major bank, there are consequences.  People who either (1) still have faith in their goverment or (2) realize who monumentally stupid such a thing is to do; will rush to their bank and take out their money.  As Mr. Schumer appears immune to any real facts, he might want to re-watch “It’s a Wonderful Life,” as this was a major plot point.

Mr. Reid is the kind of idiot who thinks gamblers have an impact on the game.  Mr. Schumer is the kind of idiot who, when hiding with the Franks in the attic, sees nothing wrong with shouting “DO YOU THINK THE NAZIS CAN HEAR US?!?” in the middle of a ghestapho raid.

It does, however, raise an interesting point: if you’re an 8-year old child in danger of being raped by your stepfather or killed by terrorists, your only hope is to arm yourself.

In the end, though, the next leader of the free world will (we hope) be picked by voters in secluded booths in their local school auditoriums, church rooms and the odd apartment basement or VFW/KOC meeting hall. And that is why John McCain will win.

John McCain is, by any objective measure a war hero. When a missile was accidentally fired into a neighboring aircraft on the U.S.S. Forestall, he didn’t bail out and run for cover. He fled the relative safety of his cockpit and rescued a fellow pilot in danger, put himself in harms way and subjected himself to serious injury. Faced with a free-ride home, he transferred to the carrier that relieved the damaged Forrestal, the U.S.S. Oriskany. That fateful and selfless decision lead to his being shot down over Vietnam three months later. Even the manner in which he was shot down is telling of his character: his plane was seriously damaged and he nonetheless completed his mission before bailing out over the target he had just bombed. Needless to say, his captors did not welcome him openly.

John McCain spent six years in brutal captivity. His commanding officer and fellow POW in the Hanoi Hilton asked him to serve as chaplain, and he did, reciting scripture from memory. When his captors offered him freedom so that they could claim a propaganda victory, he refused. At a time when America was fighting an unpopular war, John McCain could have been home in months. He followed the code he believed in, and endured years of torture. He never broke.

When Americans go into the voting booths this November, they will choose between a charismatic, young politician and a cranky old war hero. Their heads will, no doubt, be spinning as they consider universal health care, global warming, Iraq, Iran and the seventh anniversary of September 11. No doubt, Jeremiah Wright’s new book and race relations will be in their minds as well. But when they go to pull that lever, I am willing to bet that, when faced with a choice between a man who, even under torture, would not turn his back on his principles and Barack Obama, Americans will pick John McCain.