They say numbers don’t lie. Here’s some math pulled down fron the Internet recently concerning the efficiency of the Cash for Clunkers program.
- 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.
The Obama Administration claims 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 ¼ of one day’s US consumption.
And, 5 million barrels of oil costs about $350 million dollars at $75/bbl.
So, WE, the U.S. Taxpayers, all contributed to spending $3 billion (cost of Cash for Cliunkers) to save $350 million.
How good a deal was that ??? $3 BILLION for $350 Million…..
Just wait for the wonderful job of costs savings the Obama Administration and Congress will do with health care though!!
{ 14 comments… read them below or add one }
directed rebate of taxes?
I think not. Those revenues were already spent four times over times 10
This was funded by printing new money that we don’t have.
Your point about spending six times the amount to get the faux rebate argues against your defense of Obama you paint into a corner of treating oil and other big business more favorably with better hand outs
Actually since the major winners in the Clunker program was Toyota, Honda, Hyundai these were basically not automotive union plants.
The initial focus of the article was what we were getting from it. One way to look at the program was that a mass of people were given some of their taxes back if they were willing to put in 3-6 times as much of their own money to buy a car. When we give billions in tax breaks to a handful of Oil Companies who are already making billions (and have massive foreign ownership) people do not get as hot and bothered as the case of hundreds of thousand of Americans getting an a directed rebate of their taxes.
The clunkers were useful to people who needed a cheap form of transportation. Too bad they were needlessly destroyed. Older cars often have a long life ahead of them for students and low income people. Everybody can’t afford a new car.
“put them into play” very interesting phrase, as if there is no cost for the new or value to the old. It is better to create new jobs with $3B than to spend state subsidies to favor one sector and state favored unions.
The cost (in energy) of replacement cars is an interesting point, however, that would imply that ANY replacement of a car with a new car is negative factor. Yet we know that we need to replace cars as an economic reality. The cash for clunkers simply took the existing stock of already made and idle new cars and put them into play while removing the older stock permanently.
@Tom at least some of the commentators did fail to bore us with their personal attacks.
You have to be kidding. The only way the auto or any economic sector gets stronger is with jobs, not endless subsidies like Cash for Clunkers. Besides, why would people donate cars to your organization instead of getting more cash for them from Obama Motors? Better think that one thru and report back and earn that link.
The fact is that this program was propelled into action in an effort to induce an economic stimulus for the automotive industry in the remaining quarters of the fiscal year. While the economy appears to be pulling through ever so slowly, having a strong auto sector by the end of the year will help ensure we don’t fall stagnant, or dip back into a w shaped recovery.
Cash for Clunkers is another example of the economic ‘Broken Window’ fallacy. Vehicles turned in under the program had to have their engines intentionally destroyed, typically by pouring a heat-activated epoxy into the gas tank which would cause the engine to seize within a few minutes. Deliberate destruction of functioning capital assets. Supposedly to spur demand for new vehicles. In reality, at best this represented a shifting forward of future demand to the present at the expense of future vehicle sales. Most vehicles sold under the program were of foreign manufacture. Others have commented how this penalizes the poor and those only able to afford used cars as this removes so many serviceable vehicles and rebuildable motors from the secondary market.
Hearing of this program made me cringe, just the same as whenever there is a major hurricane and inevitably, some news commentator speaks cheerfully about the net economic upside because demand will be spurred for (re) construction trades in the aftermath. If destruction and renewal is in fact the key to our economic salvation, why then leave the cause up to the random forces of nature? We can remove all the uncertainty and delay in waiting for the next Katrina. We have the greatest military in the world—why not just have our Air Force intentionally bomb our cities, towns and critical infrastructure so that jobs will be created in the rebuilding of them?
@Edi: Your analysis, incomplete as usual, omits the embedded energy costs required for the manufacture, distribution and sales of said new vehicles. A full investigation of the EROEI shows this proposition to be an environmental, as well as an economic, loser. At least you didn’t bore us by repeating your ‘politics=most expensive form of…’ mantra.
This administration hasn’t gotten one thing right. The cash 4 clunkers debacle is only the latest “oops” moment of broken promises and wasted tax dollars.
Why, oh why would we want this bunch of jokers to add more regulation to the healthcare industry – which is already one of the most highly regulated industries in the nation? The administration has proven, time and again, that it can’t manage its way out of a paper bag . . . .
No, thanks. Keep your grubby paws off of my health insurance.
The effect of the reduction in gas goes on beyond one year. Additionally by taking the clunkers out of the recycled used car market there is a secondary benefit in upgrading the entire population of available equipment. That computation is not readily available.
Then there are other impacts that are not being considered such as the effect of a spurt in car sales and consumer refocus. Which has various positive and negative possibilities.
The shift in the number of miles driven of a new car vs a used car may not be relevant as the source of the data may not be transferable to a situation where the same users are given new cars as opposed to different data segments employing different aged equipment.
At the end of the day, the long term effect may be positive though it will not be a positive financial issue within the Federal Budget, it should be a positive impact within the society.
You are quibbling over whether it is
$3B to save $350M
or $2.9B to save $735M
with break even, if any, 4-5 years from
and for what?
Yes I saw the email and alluded to it but so what, quoting snopes has it’s own shortcomings
This minimal increase in fuel savings came at considerable expense to auto repair shops, auto parts stores, used car dealers, car donation charities, taxpayers and poor citizens.
This is total rubbish. I can’t believe you’d re-post a chain e-mail and expect to be taken seriously.
Snopes.com has the low-down here: http://www.snopes.com/politics/gasoline/clunkers.asp
Even worse – the EPA estimates that older vehicles (2000 and older), travel an average of 9,000 miles per year, whereas newer cars travel 12-13k miles per year.