Cash For Clunkers

[Brian]

Figured I would share some fun stuff I figured out in regards to this government program that *knocks on wood* ACTUALLY WORKED ^^

First, we know the original bill called for $1 Billion spending limit.
Assume, on average, that it is $4,000 per car participating in the program.
That means 250,000 cars participated, since the money has run out.
The least beneficial trade in that still qualifies for the program is a 18mpg car for a 22 mpg car. Let's see what happens with this least beneficial trade in.
The average driver travels 15,000 miles per year.
At 18mpg, that's 833 gallons of gas per year. At 22mpg, that's only 682 gallons of gas per year. A savings of 151 gallons of gas per year.
Since this is the least beneficial way to go, we know that all 250,000 cars must AT LEAST save 151 gallons of gas per year. That's 37,750,000 gallons of gas per year saved minimally!
If you convert that into money spent at the pump, we are hit for a loss; it only means we saved (assuming $2.50 per gallon cost to the consumer) $94,375,000 and spent one billion. I, however, look at the ecological side of this and see that money as well spent towards preserving our limited oil supplies.

What's more exciting is the talk of expanding this program to be three billion spent, meaning over 100,000,000 gallons of gas saved ^^

Please comment with any insights you've made as well. Cheers!

[Brian]

You're absolutely right. That is why I posted that it is about 37 million gallons per year saved instead of saying 37 million gallons.

[Kirsten]

Cash for Clunkers is a textbook example of the Broken Window Fallacy.

Okay, now how about a mathematical comparison of this vs. the rest of the story including:

-the environmental impact of the large amount of trash (some of it toxic pollutants and not just relatively inert mass) just generated by this program, including
---the energy it will take to shred, crush and otherwise process the reclaimable materials when they are recycled,
---the pollution associated with disposing of hazardous wastes such as engine oil, anti-freeze, refrigerant, etc.
---the non-reclaimable, non-biodegradable materials that are headed straight for the landfills

-the energy that was wasted and pollution that was generated in acquiring the resources to build and actually manufacturing the replacement cars, including
---mining and transportation of metals used in the new vehicles
---manufacture of steel, aluminum and glass for construction of new vehicles
---manufacture of plastics which uses fossil fuels not only for energy to produce them but as part of the product itself
---manufacture and shipping of electronic components used in newer vehicles, etc.,

and also we should not forget

-the additional miles that will be driven given that people now have enjoyable, energy-efficient cars to tool around in will offset some of the assumed gas savings calculated above.

[Brian]

These environmental factors are definately part of the situation, but they would still be part of the situation independent of the existance of the Cash for Clunkers insentive.

Every car will eventually be scrapped, thus the energy and pollutants for its disposal will either exist now or a few years down the road.

It is true that more cars were ordered to fit expected purchases. However, car manufacturers will always continue to make new cars. This will happen simply because they are a business and need to make a product in order for it to be sold for profit.

It is also true that the number of highway miles may go up. It is also equally as likely that the number of miles may go down. The economy is still in a recession, so the amount of free money is below average. In the end, I would predict a slight increase, since the trend of milage per year is positive, but I do not predict a larger than average increase.