Thursday, September 24, 2009

The cash for clunkers farce

A reader sent this.

- A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.
- A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.
- So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year.
- They claim 700,000 vehicles – so that's 224 million gallons / year.
- That equates to a bit over 5 million barrels of oil.
- 5 million barrels of oil is about 1/4 of one day's US consumption.
- And, 5 million barrels of oil costs about $350 million dollars at $75/bbl.
- So, we all contributed to spending $3 billion to save $350 million.

How good a deal was that???

They'll probably do a great job with health care though!


  1. ...and many of these already-cash-strapped dealerships haven't even gotten paid for those clunkers yet!

    With math skills like that, it's easy to see why our president thinks that he can give everyone health care and make it budget neutral.

  2. Just a small correction, it doesn't make that big of a difference though. They can make 19.4 gallons of gasoline from a barrel of oil according to the national petroleum institute. I think you are assuming 48 gallons/barrel.

  3. The idea was not to save money but to spend it. By releasing those funds and spurring car sales the program created a need for fuel efficient car production. This saved jobs that were teetering on the brink, May have saved some dealerships (not that i really care about car dealers), and added 3billion in liquid funds to the economy. Not to mention reducing to carbon emmisions of said 700,000 vehicles by 30-300%, and jump starting car makers to create more efficiet vehicles. Don't get me wrong, Thats not how i want my hard earned money spent, but i think you missed the point of the program.

  4. The point of the program was to force low-income people to spend more than they could afford on new cars - since the "clunkers" were not allowed to be re-sold, but had to been destroyed.