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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 “Cash for Clunkers” transaction will reduce US gasoline
consumption by 320 gallons per year.
That equates to a bit over 5 million barrels of oil.
And, 5 million barrels of oil costs about $350 million dollars at
$70/bbl.
0A
700,000 vehicles at a rebate of $4500 each will cost $3.15 billion.
So, we all contributed to spending $3 billion to save $350 million.
How good a deal was that ???
They’ll probably do a great job with health care, though.
so it would take close to 10 years to recover the cost. If crude goes down and the efficiency of the cars goes down and factoring out some of the cars as being taken out of service before 10 years(accidents) even longer…
Cash for clunkers was a poorly disguised “bailout” to a flailing auto industry. It was about bringing buyers to dealerships. It was never about reducing oil consumption.
If the cars are more efficient, that will mean lower consumption of gasoline, which means lower demand for oil, which means lower oil prices and lower costs.
Lowering the demand for gasoline and arab oil is good for the economy and the country in every term. Your original post assumes a fixed oil price of 70$, which is an improper way of examining this question. Also, to totally examine the overall effect on the economy, you need to consider the resulting economic activity generated by the purchases from the dealers.
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