Clinton vs Obama: $70 vs $30
Democratic voters in North Carolina today are expected to overwhelmingly endorse Sen. Obama over Sen. Clinton. My guess is that they are singularly focused on the gas tax issue (sarc). Sen. Obama says a gas tax holiday would save drivers "only" $30 while Sen. Clinton says it:
... would save the average American $70, even more for truckers, farmers and those with long commutes.
I previously calculated the amount saved as about $22, so I can see where Sen. Obama is coming from, but where does Sen. Clinton get the $70?
Suppose gasoline demand is perfectly inelastic (i.e., consumers are totally unresponsive to price) and you use 500 gallons of gasoline every year (aboutish 12,000 miles driven each year, aboutish 24.5 miles per gallon, from the EIA Kids Page). Saving 18.4 cents per gallon amounts to an annual savings of about $92.
In order to save $70, you'd need to use about 380 gallons of gasoline while driving 9321 miles (getting about 24.5 miles per gallon) between Memorial Day and Labor Day. Who are these intense, crazy drivers that Sen. Clinton is referring to? I'd need to drive from Boone, NC to Juneau, AK (click on the thumbnail) and back this summer in my 2004 Subaru Forester (about 24.5 miles per gallon), and then drive 2223 more miles around town the rest of summer (about 25 miles per day).
Note: a $70 savings ain't all that either.
Who cares! McCain will clean house!
Posted by: Platymapus | May 06, 2008 at 12:47 PM
AHA! The truckers and farmers; now it makes sense. At least she knows she has to win voters/states which is something Obama doesn't seem to care about. If it weren't totally flawed, the difference could have mattered to truckers, farmers, small business owners who thought it was *brilliant* to buy an SUV, and anyone who buys goods that are transported.
Posted by: justakim | May 06, 2008 at 01:09 PM
but where does Sen. Clinton get the $70?
My guess would be that the price of gas in everything you consume from food to computers to lottery tickets all take gas to provide to customers and a reduction in the price of gas will lower the cost of providing those goods and services and presumably lower the price of them.
Posted by: joshua corning | May 06, 2008 at 02:45 PM
FYI John - The average car is driven about 12,000 miles per year, whereas the average household owns about 2 cars. Hence, the average household drives over 20,000 miles per year. My source is the 2001 NHTS data, which I played around with a few years back to look at determinants of SUV ownership.
It still doesn't add up the $70 though...
Posted by: gormk | May 06, 2008 at 03:05 PM
Gorm,
Sen. Clinton says that it will save the average American $70, not household.
Posted by: John Whitehead | May 06, 2008 at 03:21 PM