To determine if clash for clunkers was worth it, let's do a little math (I know, math sucks, but stick with me). Posted on 09/11/2009 12:36:40 PM PDT by Notoriously Conservative
To determine if clash for clunkers was worth it, let's do a little math (I know, math sucks, but stick with me).
A vehicle that gets 15 mpg, and travels an average of 12,000 miles per year, uses 800 gallons of gas a year.
12,000 miles / 15mpg = 800 gallons
A vehicle that gets 25 mpg, and travels an average of 12,000 miles per year, uses 480 gallons of gas a year.
12,000 miles / 25mpg = 480 gallons
Seems pretty good so far, that's almost half as much. Almost.
With that number, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year.
800 - 480 = 320
According to the New York Times, that bastion of truth (sarcasm), 700,000 vehicles were traded in for more "efficient" cars. If you take the average gas savings, 320 gallons per year, and multiply it by 700,000, there is a savings of 224,000,000 gallons of gas a year. Wow, pretty impressive right?
700,000 x 320 = 224,000,000
Now, there are 42 gallons of gas in 1 barrel of crude oil. So, we take the saved 224,000,000 gallons of gas a year, and divide it by 42, to get the number of barrels of oils saved each year. The result is 5,333,333.33 barrels of oil saved per year. Again, impressive.
224,000,000 / 42 = 5,333,333.33
So just how much is 5,333,333.33 million barrels? Well, in one day, the US uses 20 million barrels of oil. So in one year the cash for clunkers program saves about 1/4 of a single days worth of oil. Not so impressive.
20,000,000 / 5,333,333.33 = .26
How much is 5 million barrels of oil worth? Well today (09/11/09) a barrel of oil is worth $70.97. So, that means 5.33 million barrels of oil is worth $378,506,666.43. That's a pretty good chunk of change.
5,333,333.33 x $70.97 = $378,506,666.43
But let's put that amount in perspective. Just how much was spent on "cash for clunkers?" Well, according to the NYTs, $2.877 billion in rebates. That means that in order to save $378 million dollars, the Obama and Congress spent $2.87 billion. In other words, for every dollar saved, $7.6 was spent.
$2,877,000,000.00 / $378,506,666.43 = $7.60
Way to stimulate the economy Obama! Bravo, you brilliant minds on capitol hill!
Thanks John!
All taxpayers should demand that $7.60 back! ;)
42 gallons of oil in a barrel of oil, not gasoline...
19-20 gallons of gasoline per barrel of oil...
Hah, yeah. Except, they would probably spend $14 on sending us the check.
U.S. refineries produce between 19 and 20 gallons of motor gasoline from one barrel (42 gallons) of crude oil. The remainder of the barrel yields distillate and residual fuel oils, jet fuel, and many other products. Refinery yields of individual products vary from month to month as refiners focus operations to meet demand for different products and maximize profits.
http://tonto.eia.doe.gov/ask/gasoline_faqs.asp#gallons_per_barrel
Oh, I misread, you are right. I’ll go re do the last calculations.
It’s a more difficult calculation than it seems, but I think your point stands anyway.
I did the same numbers. It’s interesting to look at the per gallon “cost” of the gas we “saved”.
I’d like to do them run out ten years, with interest on the 3 billion and inflation on the gasoline.
Without interest and inflation the deal looks better, I’m not sure about the more complex situation.
Anyone know how to run the interest on the money we borrowed to pay for this?
There, fixed it.
To determine if clash for clunkers was worth it, let’s do a little math (I know, math sucks, but stick with me).
A vehicle that gets 15 mpg, and travels an average of 12,000 miles per year, uses 800 gallons of gas a year.
12,000 miles / 15mpg = 800 gallons
A vehicle that gets 25 mpg, and travels an average of 12,000 miles per year, uses 480 gallons of gas a year.
12,000 miles / 25mpg = 480 gallons
Seems pretty good so far, that’s almost half as much. Almost.
With that number, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year.
800 - 480 = 320
According to the New York Times, that bastion of truth (sarcasm), 700,000 vehicles were traded in for more “efficient” cars. If you take the average gas savings, 320 gallons per year, and multiply it by 700,000, there is a savings of 224,000,000 gallons of gas a year. Wow, pretty impressive right?
700,000 x 320 = 224,000,000
Now, there are 19.5 gallons of gas in 1 barrel of crude oil. So, we take the saved 224,000,000 gallons of gas a year, and divide it by 42, to get the number of barrels of oils saved each year. The result is 5,333,333.33 barrels of oil saved per year. Again, impressive.
224,000,000 / 19.5 = 11,487,179.49
So just how much is 11,487,179.49 million barrels? Well, in one day, the US uses 20 million barrels of oil. So in one year the cash for clunkers program saves about 1/2 of a single days worth of oil. Not so impressive.
11,487,179.49 / 20,000,000 = .57 or 1/2
How much is 11,487,179.49 million barrels of oil worth? Well today (09/11/09) a barrel of oil is worth $70.97. So, that means 11.49 million barrels of oil is worth $815,245,128.40. That’s a pretty good chunk of change.
11,487,179.49 x $70.97 = $815,245,128.40
But let’s put that amount in perspective. Just how much was spent on “cash for clunkers?” Well, according to the NYTs, $2.877 billion in rebates. That means that in order to save $815 million dollars, the Obama and Congress spent $2.87 billion. In other words, for every dollar saved, $3.53 was spent.
$2,877,000,000.00 / $378,506,666.43 = $3.53
Its in the right direction, you are barking up the right tree!
It's ALWAYS about creating jobs!!!
Good form!
I enjoyed the execise.
ping
Reporters can't do math - it's why they're so easily impressed with things that "feel" good - and the reason they don't understand conservative's frustration with things like cash for clunkers... Loved the math!
You’ve only done the first year, though.
You can also do this by the cost of the gasoline.
244M gallons at $2.50 each is $560M/yr
$3B/$.56B = about 5.5 years to break even at current gasoline prices.
I’d say you also have to look at the loss in asset value represented by the 700,000 vehicles. At an average of $1,500 each, these “clunkers” ended up worth zero, so the taxpayers lost another billion dollars for serviceable vehicles turned worthless.
You should sent your final calculations to Glenn Beck ...
I wonder how many gallons of gas are burned to earn the $3.73 billion in the first place.
BTTT
Your first set of numbers was a lot closer. Because gas is only 1/2 of the refined oil, you need to discount the barrel for the other stuff (diesel, plastics, etc) that is made from the rest.
Instead of $70/barrel, its more like $35/barrel.
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