Cash For Clunkers: Does Not Add Up

12:37:00 PM


I just got this and it confirms what most common sense people already know. Are these numbers correct? 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 CLUNKED - so that's 224 million gallons / year. That equates to 5.33 million barrels of oil. 5.33 million barrels of oil is about ¼ of one day's US consumption. And, 5.33 million barrels of oil costs about $400 million dollars at $75/bbl. So, we all contributed to spending $3+ billion to save $400 million. If these numbers are close, what economic strategy was really being employed by our government? I have friends who own dealerships and they stated the "program" provided a needed injection of new business, given the alternative of the past months. Not all of them have been paid (yet). However, is this sound business strategy or simply throwing money at a problem, in the hopes it will provide the solution. Look out public health care...

Ralph Schroeder
President
AAE Group

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