Posted on 01/19/2011 4:27:47 PM PST by MNDude
The person who calculated this bit of information went to high school in Pittsburgh, Pa. He is now & has been a professor at The University of West Virginia in Morgantown, West Virginia for the last forty some years. I never looked at the clunker program in such depth. But he did.
Clunker Math
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 we saved. I'm pretty sure they will do a great job with our health care, though.
Even the Speed channel show “Rides” with Stacey David had a blurb about what a stupid program the “Cash for Clunkers” program was. It detailed every single economic ill effect it created, and there were a bunch of them, from junkyards deprived of income to mechanics and auto parts stores deprived of income, to people who couldn’t buy affordable used cars because of it.
Bad math, but the program was still very flawed.
What I mean to say is, that the math is wrong. But we really didn’t need that math to understand that there is NFW that the government can run any program more efficiently than private businesses.
NFW
I’m sure the program also did something to increase the cost of used cars.
$3 billion one time cost for $350 million savings per year. How many years the savings will continue is unclear, however it will be more than one and could be as many as ten, which would be a $3.5 billion savings.
Worse still those clunkers had value for their parts. Every part not salvaged from a clunker is one less that can be used to keep another car going. Now you not only have the clunker that was sacrificed to the program you also have another car that doesn't run. You've taken two cars out of circulation, but only one is replaced.
IMHO it was one of these liberal rainbow stews. Sounded good, but it was not carefully, or otherwise, thought through before cranking it up to full speed.
Ethanol is another rainbow stew recipes that will come back to haunt us. Along with CFL’s.
Face it, government can do nothing correctly or inexpensively. A government solution or program to solve a problem means not only will the problem will not be solved, it will get worse, and a number of new problems will be created. Meanwhile government gotten bigger, more intrusive and more firmly entrenched as it creates new dependencies.
You do understand the purpose of the program was to payback the UAW for its support of Obama?
I’m just glad I drive an old Honda and they weren’t on the clunker list and therefore I have access to spare parts without artificially inflated (demand for parts)prices.
But with 20% unemployment, it all evens out.
How “Green” is a program that destroys the parts from 700,000 vehicles instead of allowing them to be recycled?
Especially when you consider that many older cars now being repaired will have to use new and rebuilt parts from foreign countries, driving repair prices up and negatively impacting the balance of trade as well as the ecology.
You'd also have to compare it to buying a car or house with a loan, and look at overall cost when loan is paid off. Since the government BORROWED the money in the first place, with interest on a 10 year loan at 6%, total cost $3.997 billion.
Also, the problem is the gas money saved IS NOT from the ones spending the money (tax payers) its from the owners of the new cars. The tax payers never see a return on investment. I paid money so someone else could save. Actually hundreds of people had to pay for each individual owner could save.
Imagine your neighbor coming over to your house and telling you that if YOU spent $10,000 for solar panels for HIS house he could save $200 a month on electricity, and that in 50 months he would have saved the amount of money you paid and everything after that is profit (for him).
Also, the 224 million gallons of gas saved, not only will the government spend $3 billion plus interest, they'll also lose tax revenues from the gas not sold. At $1 a gallon for tax (just a guess) thats $224 million a year in lost gas tax revenues. Over 10 years time thats $2.24 BILLION. Now over 10 years amount spent, plus interest, plus gas tax revenues lost, that would be about $6.2 billion
Now granted, somewhere in there, most of these cars, NEARLY all of them, would have made their way to the junk yard anyway, and probably been replaced by a more economical car. But also, some of these cars or trucks would not have been replaced by what the were replaced with. Some of these vehicles would have been replaced by vehicles getting less gas mileage than the new ones bought.
Economics is a funny thing. Its not simply a static thing. It moves and changes and has variables.
“NFW”
Anachronym for Norfolk and Waypal.
Regardless of the “wrong math”, there’s no efficiency comparison to be made - the private sector would never “run” such a program.
BTW, what’s wrong with the math?
Maybe it wasn’t sound economically, but have you noticed the temperatures lately?
Kash-4-Klunkers ended Global Warming forever!
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