Tuesday, February 9, 2010

Cash clunker math

Iknle Mama got this email. The Math looks right. Any one know the make and model of the clunker in the photo?
Think of it this way: A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of gas a year. A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a year. So, 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 saved per year. That equates to a bit over 5 million barrels of oil. 5 million barrels is about 5 hours worth of US consumption. More importantly, 5 million barrels of oil at $70 per barrel costs about $350 million dollars So, the government paid $3 billion of our tax dollars to save $350 million. We spent $8.57 for every dollar saved.
I'm pretty sure they will do a great job with health care, though.

Did Blogger change something that is making the pictures much smaller?


  1. How many polar bears did we save with that $3 billion?

  2. Not a one, of course. And the reckoning is incomplete; we are of course burning about five to seven tons of coal to refine the steel and aluminium used to make the new car and recycle the old one. Huge environmental LOSS this one is.

  3. BTW, my first car was a 1971 Chevy Townsman, very similar to the Kingswood, but without the wood paneling. 13mpg was good with that thing--but then again, my dad had decided to "save" money by not replacing the carbeuretor. That might have changed a few things....

  4. Thinking this through, in fairness, that $3 billion was purportedly a one-time expense, where the $350 million saved per year is expected to continue. Assuming such savings continue (i.e., new cars retain their efficiency and gas prices remain unchanged), it will take 8.57 years for the program to break even. So, sometime in 2019, we might start seeing some savings. But by then, those 15 MPG cars would probably have been replaced, without government expense.

    So the equation's a bit more complicated, but it still comes out a boondoggle.

  5. The boondoggle also artificially inflated the affordable car market and the used parts market.

  6. Star, actual new car sales improvements were about 1/8 of what the government said. The trick is that when you look at sales before, during, and after the program, the program clearly sucked up sales that would have occurred anyways.

    So we're talking $24000 per additional vehicle sold, so that's a "payoff" (assuming $2.50/gallon gas) in about 30 years, not nine.

    Except for the fact that you just burned six tons or more of coal to save that gasoline. All in all, it's a net economic and environmental loss. All hands at the White House to Bastiat to learn about the "fallacy of broken windows," stat!

  7. Bike, very good. It's a 72 Chev. Kingswood. My whole issue with the program is that they have taken working, usable automobiles and made them unusable. This goes against everything my Kingswood owner father has taught me.

  8. exactly guitarman.
    assets were destroyed.
    that means wealth was also destroyed.

  9. Wealth was transferred and wealth was destroyed.

    Liberal Fascism, indeed.

  10. I bet your dad loved the disappearing tailgate on a rainy day. (my mom always cringed to put it down, as it would invariably send a spray of foul smelling water back up)

    BTW, Guitarman, the picture name gave it away. :^) One didn't exactly have to be Sherlock Holmes to read the caption and google it.....

    ...and ya gotta love it when liberals tell us that the way to create wealth is to destroy it. Thanks, guys, but next time, would you spend your time reading some Bastiat instead of going to the Capitol to vote on something insane?

  11. Another way of putting it: If nobody drove for a whole day, we would save a whole days worth of fuel.

  12. how about: govt employees dont drive for a week?
    we'd save fuel, and money at the same time.