Math Is Hard: Cash for Clunkers Edition

A post from Vodkapundit, Stephen Green, titled “You’ve Got to Spend Monday to Spend Money” reposted below without comment:

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.

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/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… 

4 thoughts on “Math Is Hard: Cash for Clunkers Edition

  1. It appears the person doing the math from your quoted article was related to the person counting people at the Tea Party rally last weekend.

    Snopes looked at these numbers and found that the math was based on 42 gallons of oil per barrel which is correct. Unfortunately we only get between 19-20 gallons of gas from that 42 gallons of oil.

    That makes the bottom line more like $735 million in savings per year, not the quoted $350 million. In other words more than twice your figures but still less than properly inflating your tires.

  2. The math doesn’t include the revenue lost by auto repair shops, parts stores, used car dealers or car donation charities as a result of destroying 700,000 running vehicles!

  3. BWJ,

    You are right. Make the number twice as great. Still not a good deal (in part since that 3 billion is borrowed).

    C4C,

    You are right as well. But remember, it’s for the greater good. All of us need to sacrifice–some cars must sacrifice more than others.

  4. BWJ,

    So, we end up with $3billion this year plus interest for the foreseeable future to save $700 million a year in oil for the next couple of years, but what was the point? The sarcastic title of Vodkapundit’s post still stands: you gotta spend money to spend money.

    This program didn’t create new demand for more efficient cars it just enabled buyers to slide down the demand curve. Left on its own this transition to newer technology would have happened on its own as the clunkers came to the end of their usefullness and people were forced to buy a different vehicle. Instead, we detroyed usable vehicles (read: wealth), redistributed future money from all future taxpayers to a few present-day car buyers, and in the process threatened the future prosperity of all Americans.

    I’ll ask it again. What was the point of this program?

Comments are closed.