Monday, September 14, 2009

Cash for Clunkers Math

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, getting rid of each average clunker 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 1/4 of one day's US consumption.

And, 5 million barrels of oil costs about $ 350 million dollars at $75/bbl.

So, we all contributed to spending $3 billion to save $350 million. And we ran up the price of used cars for the people that can’t possible afford the new ones. In all likelihood there will be a rash of repos in about 6 months from the ones that bought and can’t afford.

No further comment necessary.

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