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.