From genuine rocket scientist Ed Lambert:
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.
AdvertisementSo, the average “Cash for Clunkers” 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 ¼ of one day’s US consumption. And, 5 million barrels of oil costs about $350 million dollars at $70/bbl.
We all contributed to spending $3 billion to save $350 million. How good a deal was that ???
They’ll probably do a better job with health care though
Er…
Socialism: the ‘ism’ for people who cant pass 9th grade math.
Yeah, but think of all those union jobs at Chrysler & GM that were saved.
Oh, right. Those companies lost market share.
You forgot to value the cars destroyed! Let’s say the average clunker is valued a $3,000 (probably low) times the 700,000 estimate of clunkers destroyed – equals to $2.1 billion in value destroyed! So we spend $3 billion to destroy assets valued at $2.1 billion – great investment strategy.
Hstad
Let’s not let the facts confuse us!
Seriously though, where did the 12000 mi/year figure come from, and shouldn’t we multiply by the number of years left in the clunker? I.e. $3 billion vs years*350 million?
No, no, no! It’s the reduction in air pollution! And the enhanced national security! (Phew! Those should be safely unquantifiable…)
Not that I want to be perceived as an advocate of socialist programs, but I’m kinda with SteveB on this.
Figure an 8-10 year life span for each new car (and assume the clunker would have lived that long), and it actually comes pretty close to parity.
Why do you hate poor people and children? How much are the insurance companies paying you? Just admit it, you hate the idea of a black President!
Abu ghraib!!! Bush lied!!!!eleven!!
It should be possible to quantify the air pollution without too much difficulty.
If you want unquantifiable, try “the aesthetic improvement from not having so many ugly cars on the freeway”
Quantifying this is beyond my paygrade.
From an environmental standpoint, you up the average fuel efficiency of the American auto fleet, but at the cost of taking cars off the road before the natural end of their lives, which increases the average number of cars each Amercian drives in their lifetime, with all of the environmental impact of the additional auto manfacturing and disposal–a net loss to the environment, I’d bet.
Do the roads look prettier? This program may have been called “Cash for Clunkers”, but the visual or mechanical quality of the car is irrelevant to eligibility in the program. It is really “Cash for Guzzlers” that supporters misnamed for their own narrative reasons. Many old cars are prettier than many new ones. Let’s call it a wash.
Air pollution? It’s decreased a bit, but how to you put a dollar figure on that considering that we have don’t have any active programs to scrub the air? Not yet, anyway.
So you got saved gas. Well, it didn’t save me any gas because my clunker, like most real clunkers, is a rice burner and not eligible for the program because the milage is too good. But I am in the market for a “new” (read “newer but still used”) car, which I will likely pay more for because of the market distortions caused by cash for clunkers. A definite loss for me.
So who gained in any meaningful way? The civil service? Well, yeah. Anyone else?
Since a new car is more fun to drive ( ah, that addictive new car smell!) and since it clearly gets better gas mileage, can we not make a case that the new car will certainly be driven more often than the “clunker”?
SteveB is right about the math. The broader conclusion that myriad ill-conceived and mismanaged government programs like this presage what we can expect from Obamacare, still stands, though.
All I know is, if I’d sold a clunker for $4,500 I could have gone right out and bought three $1,500 clunkers and sold them for $4,500 each, or $13,500.
That’s a solid win-win business plan — for everybody except the taxpayer.
There is one thing that was not mentioned – the effect of moving car sales up from the future. Most of the “clunkers”, or as Tim says, “guzzlers” would have been coming off the road in about 2 years, or just when the new skyrocketing CAFE stanards really hit. Since most of the new cars bought in “cash for guzzlers”, which will be getting worse fuel mileage than the 2012s, 2013s, and so on, will still be on the road in 8 years, the back-end of the deal will be worse.
A “genuine rocket scientist” who can get 224 million gallons of gasoline out of 5 million barrels of oil, huh? He should get out of the rocket business and have Exxon buy him a Pacific island, and maybe one of those rectangular states in the middle of the country. I can get 224 gallons of gas out of 5 barrels of gas, no problem, but a 100% conversion of crude into gasoline would be a neat trick.
SteveB’s right about the time aspect; the other thing that hasn’t been mentioned is that once Obama’s craven attitude towards Iran pushes Israel into a strike, oil will be well above $70….
Bgates:
224 million divided by 5 million = 44 gallons of gas per barrel of oil. Isn’t a barrel 55 gallons? It’s not a 100% conversion, its 80%. Is 80% accurate? I don’t know.
Also, no one has taken into account the overhead. We had to pay a small army of bureaucrats for a few weeks to check the dots on the i’s and the crosses on the t’s, authorize the checks, print the checks, mail the checks, answer questions about the checks….
And don’t forget the cost of money. That $3B was borrowed at 3 or 4% and won’t be paid back any time soon.
Yes, the clunkers are off the road and therefore the gas savings will occur for a number of years. (2 years: the remaining life of the clunker? 10 years: the life of the clunker’s replacement? I think 2 is more accurate, but take the average: 6 years.)
So we paid $3B today plus overhead, plus interest for the foreseeable future on both, for a reduction is gas usage of 224M gallons of gas/year for the next six years. Only the government and that guy selling eggs for in Catch 22 could claim that is a profit making proposition.
Well, my Congressman is a rocket scientist too and that hasn’t worked out too well for us in NJ. While I’m not disagreeing with Mr. Lambert’s premise my hope is that he checks his numbers on space flights a little closer than he did on this.
A barrel of oil is 42 gallons, true, but that’s gallons of crude, not gasoline. From what 30 seconds of googling informed me is that from a 42 gallon barrel of oil one gets the following products after refining:
10.31 gals of diesel
1.38 gals of heavy distillates (like home heating oil)
4.07 gals jet fuel (not to be confused with strong coffee)
7.01 gals of various products (lubricants, etc)
1.68 gals heavy fuel oil
1.72 gals liquefied petroleum gases (LPG)
18.56 gals of gasoline
(Now if you do math like I do math, you’ll notice that this adds up to nearly 45 gallons; evidently the refining processes change the density (and increase the volume) of some of these products)
So these 224 million gallons of gas in fact are the equivalent of a little over 12 million barrels of oil, not 5, which means we “may” save a whopping $840 million dollars by spending $3 billion. Again, it still is insane but if we’re going to be racist by opposing these policies we might as well do it with somewhat more accurate numbers.
Oh, and a barrel is 42 gallons; a drum is 55 gallons.
I have no idea what a ‘peck’ is, though.
A quire is 125 sheets, something every racist or printer should know. As for the costs of the program, it was a feel-good program for car dealers. Every other consideration falls flat in the face of the fact that car dealers got a payout, newspapers sold lots of ads, and it was a program that worked for a weekend or two. For some people, anyway.
(“I have no idea what a ‘peck’ is, though.” It’s what Obama’s repeated television appearences do to our eyeballs and brains, lil’ bro. Enough “pecking” and assimilation occurs.)
Except the car dealers haven’t even gotten their payouts yet, have they?
I’m sure that makes doctors really excited about the govt running health care.
Since my “newest” vehicle is a 2002, and even it was purchased used, I am not qualified to participate in this scientific exercise.
Being an empathetic sort, however, and irrationally attached to the inanimate objects entrusted to my care (like my ’87 Pathfinder, ’92 525i…you get the picture) leaves me uniquely positioned to pontificate on the emotional toll of watching much loved, perfectly good, older vehicles executed before their time:
Watch out, Granny. Your mileage ain’t what it used to be either…
Murderous bastards.
One must also project out the life of the vehicle had it not been destroyed, and not just one years worth.
Give the old vehicles 10 more years worth of life.
Give the new ones 15 years.
Re-calculate with the $850 million from Mr. Bingley
Mr. Bingley,
The car dealers will be getting years of monthly checks from those who bought new cars under the program. The government check is just one part of their gain. And for the size of them, they’ll be patient for at least a little while.
jon is doing his usual dance for the powers-that-be in #25. The Obama administration is having demonstratable problems getting a measly $3 billion to a relatively small number of car dealers across the country, yet they expect us to fork over trillions for health care at (at best) an equivalent efficency.
It is, in fact, self-evident that jon has never run his own business, else he would recognize the challenge of having forked over several hundreds of thousands of dollars (per dealer) in expectation of government compensation, only to (futilely) await for a “check in the mail.”
Alas, real honest-to-God businesses -unlike the government- have to operate on cash outflow with respect to revenue gained. Come to think of it, this literally is a “the check is in the mail” situation, but who’s going to sue the Feds!?
I’ll also take a moment to point out the irony that many late-model cars & trucks qualified for the program, while my 1992 Acura Integra does not. 129k miles on it, rust on the right-rear quarter panel, shabby interior, yet it still averages 30-31mpg overall. And I don’t freaking qualify!!
That’s just Not Fair.
McGehee,
That’s very childish. If you buy 3 clunker cars and decide to trade them, you have BUY 3 new cars. Assuming you pay $15k/car, you’ll end up spending $45k and get ~$13k for the clunkers. However, what are you going to do with the 3 new cars? Sell them? Their value has been slashed by 2/3 immediately so you actually end up losing $10k at the end. That scheme doesn’t work.
As it has been disclosed, saving $350 million is only attribute to one year. Assuming an average clunker car lives for 15 years, the total saving of $5.25 Billion in that period time. Of course you have to take into the account the amount of lose value on the destroyed assets (clunker) which is around $3.15 Billion. However, you also have to take into the account amount extracted from the body parts and material returned for reproduction. I have to say, I do not know how much saving the last part would bring but assuming around $100-$200 million, the total saving would be around $2+ Billion in addition for sustaining or job creation for auto industry and affiliated businesses. I do not believe this is a lost cause.
He said: “If you want unquantifiable, try “the aesthetic improvement from not having so many ugly cars on the freeway””
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If the US automakers were making aesthetically-pleasing cars, we wouldn’t have had to bail them out or give them $3B in per-car subsidies.
Instead, we’ve merely ensured the continuation of the people who brought us the Aztek, the Pacer, the Gremlin, the Citation, the Skylark . . .