A Point About Cash For Clunkers

Dealers are starting to wake to the hangover from the Cash for Clunkers program. Yes it stimulated purchasing for new cars, but it crammed about half a year of demand into a couple of months. As a result, dealers are looking at some very lean months ahead. A short term high resulting in a long term down (sounds like a drug trip).

One other little point that someone came up with as follows:

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/car 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 $70/bbl.
So, we all contributed to spending $3 billion to save $350 million.

Short term lift. Long term headache.