Among the brave new government programs, like TARP bailouts, and auto industry takeovers, Cash for Clunkers was another program that defied logic. There were several arguments to "justify" it, few of which seem to have panned out. One of the worst performers was the argument that it would save vast sums of money wasted on poor fuel efficiency.
This from a friend of mine:
I guess I must be on the wrong page…
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, 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 $350 million dollars at $75/bbl.
So, we all contributed to spending $3 billion to save $350 million.
How good a deal was that ???
As author Keith Gosney alludes, the health care math used by the President is similarly challenged. He will expand access, add 42 million new insureds, and no one will be rationed out, no provider will be reimbursed less, and the budget will not be blown. Sounds "fishy".