Do the math
Published Wed, Sep 16 2009 8:02 AM
Once again, my dad has forwarded me an interesting piece of email. It’s worth a look I believe…
Cash for clunkers
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 ¼ of one day's US consumption.
And, 5 million barrels of oil costs about $375 million dollars at $75/bbl.
So, we all contributed to spending $3 billion to save $375 million.
How good a deal was that ???
But they'll probably do a really great job with health care though!!
The numbers aren’t quite right though. A barrel of fuel is 55 gallons, so we’re really only saving slightly over 4 million barrels of oil a year with this program. Still, let’s leave the estimate at 5 million to keep things optimistic, and let’s use the price per barrel of oil provided here (the current price as I write this is $70.45 a barrel for light sweet crude). The real numbers are just too much more depressing after all (end result is only 287 million).
Are you liberals out there still convinced that this was a good idea?
Oh, wait!
The idea wasn't just to save fuel was it? It was also to help boost auto sales. Well, it certainly did that. It also eliminated more than a few “classic” cars too, no doubt. Sadly though, there’s no way the boost can last now that the program is over.
What probably happened is that people that were going to wait a bit to buy simply changed the timing of their purchase decision to take advantage of the money extorted from everyone else. Now that the program’s over those people have their cars, and they won’t be buying when they would have otherwise. My prediction for this is that we’ll see a post-“clunkers” decline in sales that will end up with a lower sales rate for a month or two than would have otherwise been the case before sales level off again at the same old dismal rate.
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