Wednesday, September 23, 2009

DO THE MATH...HOW SMART WAS THE CASH FOR CLUNKERS PROGRAM?

The government said that they passed the Cash For Clunkers Program to help save the environment and to make sure that we are not as dependent on foreign oils. Check out the math. Maybe I am doing the math wrong.

A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of gas a year. A vehicle that travels 12,000 miles a year at 25 mpg 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 saved per year. That equates to a bit over 5 million barrels of oil. Five million barrels of oil is about 5 hours worth of US consumption.

More importantly, 5 million barrels of oil at $70 per barrel (pretty close to the current price) costs about $350 million dollars. So, the government paid $3 billion of our tax dollars to save $350 million. We spent $8.57 for every dollar saved. How good a deal was that? They'll probably do a great job with health care though!! Hey - go figure!!

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