Cash for Clunkers

Cash for Clunkers was an interesting idea, but was it really cost effective? Did it really stimulate the economy? What was the net result?

• A vehicle getting 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.
• A vehicle getting 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 – so that's 224 million gallons per year.
• That equates to saving a bit over 5 million barrels of oil per year. I repeat---per YEAR.
• 5 million barrels of oil is about ¼ of one day's US consumption.
• And, 5 million barrels of oil costs about $350 million dollars at $75/bbl.
• Our Government "gave" each Clunker Trader $4,500 per car for 700,000 transactions which cost US Taxpayers $3,150,000,000--not including Washington's astounding administrative costs.
• So, we all contributed through our taxes to spend more than $3 billion to save $350 million.

On top of that you must understand that some dealers still haven't been paid. The delay has been an enormous burden on the dealers. Many ended up having to borrow money until the government decided to get on the stick and pay what they promised, but who loaned them the money? Banks sure wouldn't trust them, so they were forced to go to private financing at outrageous rates. So, let me know again how this helped?

Interesting idea that wasn't well thought out and was poorly implemented. No surprise!