Thursday, September 17, 2009

Less Bang For The Clunk

A big H/T to retired cop Al for the following analysis of the Cash for Clunkers scam program :

A vehicle at 15 mpg traveling 12,000 miles per year uses 800 gallons a year of gasoline.

A vehicle at 25 mpg traveling 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???

They'll probably do a great job with health care though!!

John J. Lotze

Actually the payback period is five years.
Do the math a little differently - use the price of gas rather than the price of a barrel of crude. Those 224 million gallons of gas at $2.70 a gallon cost $604.8 million. If the price of gas remains constant, the pay back is 4.96 years.


SoCalOilMan said...

First off; $2.70/gal., Haven't seen that price around here in two years. If you add in the taxes they are going to stick on each gallon shortly, the payback will be much quicker (not a real plus for this whole boondoggle).

sig94 said...

That's what I paid last week when I gassed up. I saw the gas prices in CA in July and they were about $0.30 to $0.50 higher than in NY. San Fran gas was ridiculous. But yer right - still a boondoggle.