“Cash for Clunkers” proves better for saving oil and CO2 — and for the economy — than predicted, so of course Senate GOP opposes it

A person passes a car in a dumpster placed in front of an auto ...I was not a big fan of the final version of “Cash for Clunkers” because its mileage improvement requirements were so inadequate, as Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) explained here.

But in the real world, the public has mostly turned in gas-guzzlers in exchange for fuel-efficient cars — which perhaps should not have been a total surprise since oil prices are rising, gas guzzlers remain a tough resell in the used car market, and most fuel-efficient cars are much cheaper than SUVs.  In fact, the AP reports:

Transportation Secretary Ray LaHood said the average mileage of new vehicles purchased through the program is 9.6 miles per gallon higher than for the vehicles traded in for scrap. Buyers of new cars and trucks that get 10 mpg better than their trade-ins get the $4,500 rebate. People whose cars get between 4 mpg and 10 mpg better fuel efficiency qualify for a smaller $3,500 rebate.

LaHood said some 80 percent of the traded-in vehicles are pickups or SUVs, meaning many gas-guzzlers are being taken off the road. The Ford Focus is a leading replacement vehicle. General Motors Co., Chrysler Group LLC and Ford accounted for 47 percent of the new vehicles purchased.

A 9 mpg gain translates into annual savings of 3.8 million barrels of oil per year and nearly $1,000 for consumers at the pump — not to mention that it will reduce carbon dioxide emissions by 660,000 metric tons a year.  Okay, not a cost-effective emission reducer, but still, given the multiple benefits of the program, pretty darn good.

Indeed, the environmental gain is even greater because the trade-ins are not resold to the public or shipped to the developing world — but recycled.

The economic gain in this depressed economy and even more depressed auto market are pretty big for such a small program:

Ford said its July sales rose 1.6 percent in July from the same month last year, its first year-over-year increase since November 2007, while Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by “clunkers” deals. Other automakers showed gains, giving ammunition to supporters of the car rebate program.

But the Senate GOP, of course, opposes all government programs no matter how successful (see The Audacity of Nope: The GOP channels Groucho Marx, “Whatever it is, I’m against it”):

Senate Republicans appeared to be in no hurry.

“We were told this program would last for several months,” GOP leader Mitch McConnell of Kentucky said. “It ran out of money in a week, prompting the House to rush a $2 billion extension before anybody even had time to figure out what happened to the first billion.”

Yes, the GOP argument is that it’s too damn popular a government program, so we have to figure out how to slow it down long enough to kill it.

McConnell said, “It’s not a bad idea to look for a second opinion. All the more so if they say they’re in a hurry.”

Sen. Jon Kyl of Arizona, the Senate’s second-ranking Republican, suggested lawmakers “take a time-out” so they could receive more details about the program before providing more money. “I’m concerned that somebody’s going to have to pay for this….”

Uhh, yes.  Someone has to pay for  successful government programs….

Unlike conservatives, who can’t be moved by the evidence, even the moderate Dem skeptic Feinstein has been persuaded by the data and program success:

“The best solution is to continue and extend the program as it is,” Feinstein said. “The program appears to be running very well.”

The bottom line is that the program seems to be a shot in the arm for the auto industry, while achieving better energy and environmental gains than expected.  Senate conservatives will bloviate, but I can’t imagine them being dumb enough to filibuster it.

26 Responses to “Cash for Clunkers” proves better for saving oil and CO2 — and for the economy — than predicted, so of course Senate GOP opposes it

  1. Lou Grinzo says:

    Of course the Republicans will try to put up a road block. Their greatest fear over the next few years: Obama succeeds in many areas, not just this one, and reminds voters what an effective and good president looks like. If that happens, what do the Republicans have to fall back on? “We were against everything you now like–vote for us!”

    When enough voters decide that the answer to a question is “yes”, then “the party of no” is the last place any politician wants to be. Therefore, they have to stop the accumulation of evidence that will convince people the answer is “yes”.

  2. dhogaza says:

    I saw LaHood’s statement in the NYTimes yesterday, and was pleasantly surprised by the average gain in mileage per trade-in. Not a bad mix of economic stimulus and environmental sensibility after all.

    For Ford alone, apparently the majority of those traded in are F150 pickups and Explorers, with the Fusion and Escape being the most common purchase. The Escape is still an SUV (boo-hiss) but at least it’s rated 20/28 mpg vs. the current Explorer’s 14/20, and the hybrid version’s a reasonable 34/31.

    The GOP’s looking pretty silly on this one …

  3. dhogaza says:

    Oh, another tidbit: “The Toyota Prius hybrid, which gets 46 miles per gallon according to EPA estimates, is the fourth best-selling car.”

    (being sold under the cash-for-clunkers program)

  4. Mark says:

    Anybody notice how people having more money helps the economy? Lowering taxes has the same affect.

    [JR: Yeah, that’s why the economy performed so well under Bush….]

  5. Albert says:

    The drop in demand for gas because of the increased mileage translates into a drop in the price of oil (though it may be hard to discern with all the other factors involved). So we all save.

    Also, remind me how long it would have taken the Republican’s “drill, baby, drill” policy to add this much oil to the market? The Republicans just wanted the give-away to be to their palls at Exxon, rather than Ford, GM, Chrysler, and the American people. They seem to want to accelerate climate change, rather than fight it.

  6. EricG says:

    It’s great to see results better than anticipated, but it’s also clear from the response that the program is too rich. The rebates should be shaved and the mileage increase raised. We must get more bang for our taxpayer buck. It would be hard to change the rules at this point, but after the $2 billion tranche is spent perhaps we can take a timeout and introduce a more reasonable program next year.

  7. Wonhyo says:

    JR – Thanks, these are just the facts and figures I was looking for.

    On the surface, this bill looked dubious, but it turns out it was a crafty compromise. While the minimum fuel efficiency improvement is 4 mpg, the extra $1,000 for 10 mpg improvement must’ve been a strong incentive, on top of the high oil prices. Somebody writing this bill did their homework.

    My hope is this bill continues to be funded, but that the improvement requirement increases over time. The next increment would be $3,500 for a 10 mpg improvement and $4,500 for a 20 mpg improvement.

    I hope the electric/PHEV incentives improve, too. The incentive should be larger for a more efficient vehicle (less energy expended per mile driven), not for a vehicle with an unnecessarily large battery.

  8. pete best says:

    3.8 Mbp/y saved as opossed to the 20 Mb/day used. Now lets just ask how many barrels of oil to make one of these replacement cars and what happens to the dumped vehicles and I smell that those barrels saved probably for a few years only offser the oil used to make em if that.

    If Americans were buying 50-60 MPG vehicles then fine, the peak oil story yeaterday will require all US vehicle owners to change them to much more energy efficient cars. If the rest of the world has to wait for the USA to be bothered and serious about this issue then its time up for little less than 4C of warming.

  9. Pete O'Connor says:

    Pete —
    The “dumped vehicles” are recycled, as it says in the post.

    Yes, the impact is small compared to the amount used overall, because the program is small. $1 billion is not much in a country of 300 million people.

    Very little petroleum is used in manufacturing cars. I’d guess a small amount for manufacturing plastics and for shipping parts around, under 1 barrel per car. Do you have any numbers backing up your assertion that it is equal to 50 barrels per car? (Since each car is saving about 15 barrels per year and you claim that the embodied oil from manufacturing offsets a “few years” savings.) I mean, on your basis, the “embodied oil” cost alone for a new car would be ~$3,500.

    50-60 mpg cars would be great, but you save as much gasoline going from 10 mpg to 20 mpg as you do going from 20 mpg to infinity. Getting rid of the clunkers is a major step.

  10. Bob Wallace says:

    #8 – How many barrels used to construct a car?

    “Michael C. Ruppert, editor of From the Wilderness and author of Crossing the Rubicon: The Decline of The American Empire at the End of the Age of Oil, has estimated the construction of the average car consumes 42 barrels of oil.”

    You can google the link if you want it.

    42 barrels at 42 gallons per = 1,764 gallons.

    Average drive drives 12,000 miles per year. At 18 MPG that’s 667 gallons per year. A 9.6 MGP improvement would mean 435 gallons per year, a 232 per year savings.

    Based on all that, a 7.6 year break even point at which the oil used is replaced by the oil used.

    A great deal? No. But every year beyond 7.6 saves some oil. The average lifespan of cars (US DOT) is 12 years.

    And don’t overlook the likelihood that without this program some of the clunkers might well have been replaced with inefficient models. Dealers were deeply discounting low MPG models not long ago when fuel prices were very high.

    Additionally this program seems to be giving a needed boost to the economy. And a recovered economy will mean that manufacturers can get busy finding more ways to solve our energy problems. Little progress is made when things have ground to a halt.

    The dumped vehicles? They get crunched and the metal gets reused, often as rebar and guard rails.

    [JR: Need a better source, I think. Also must calculate the embedded energy that is recovered in the recycling, which is considerable.]

  11. Ken Johnson says:

    This program gives a hint of what could be achieved with pricing incentives. The problem is that the program is not really sustainable because it is not self-financing. But suppose buyers of new, fuel-efficient cars were offered long-term, low interest loans, with loan financing provided by refundable fees on inefficient cars in the same utility class. Buyers would not consider loan payments in their preference valuations because lifecycle fuel savings would offset the payments. Similarly, fee refunds would be offset by relatively higher lifecycle fuel costs. The loans and fees could induce purchase price differences similar to the Clunker program, but there would be no need for government financing. Furthermore, reducing sales of brand new “Clunkers” could have much more impact than retiring old Clunkers that are already near the end of their useful lifetime.

    I think this type of incentive program could have much greater impact than federal fuel-economy/emission standards. Also, the financial incentive would be an order of magnitude greater than projected emission prices under cap-and-trade. The only “benefit” of including transportation fuels in cap-and-trade is that the huge emission reduction that might result from vehicle financing incentives could be traded for equivent emission increases elsewhere (e.g. from coal combustion).

  12. dhogaza says:

    The dumped cars are being sold for salvage – an old-fashioned word for “recycling”. That’s one of the requirements of the program.

  13. Jacal says:

    Hmmmm. Take the money from all tax payers and give $4500 to a person who can already afford a “category 2 or 3” replacement… Tax the poor and give to the rich?

    [JR: The rich don’t own clunkers. The middle class are the ones mostly availing themselves of this.]

    I heard at least five people call our local progressive radio show this morning and brag that they turned in their American-made cars and bought Toyotas and Hondas. That helps Ford and GM and our American workers all right.

    [JR: This is not a fact-free zone: “The top-selling vehicle under the program so far is the Ford Focus. Four of the top 10-selling vehicles are manufactured by Detroit’s Big Three. Of non-Big Three purchases, the Transportation Department’s preliminary analysis suggests that more than half of these new vehicles were manufactured in the United States.”]


  14. Bob Wallace says:

    No, not “salvage” in the usual sense. In the auto business salvage means reused. Usable parts are pulled to keep similar models running.

    With this program the engines must be destroyed. A substance (I think containing silicon) is run through the engine until it is no longer usable.

    Drive trains can be reused with restrictions.

    Each clunker taken off the road is a low MPG vehicle gone.

  15. Pete O'Connor says:

    #10 — Mr. Ruppert’s work appears to be converting all energy into oil terms, if I’m looking at the same site you were. He mentions electricity as one aspect of energy use in manufacturing — but virtually no electricity is generated from oil in the U.S., and not much industrial process heat either.

    Maybe 42 barrels of oil equivalent is in the ballpark for overall manufacturing energy use, but most of that is not actual oil.

  16. Bob Wallace says:

    Pete – reading closer it does seem that the 42 barrels is a measure of all energy, not just oil.

    “I have good numbers showing that it requires 12% of all the hydrocarbon energy a vehicle will use in its lifetime just to make the vehicle in the first place (ore mining, raw material transport, paint, electricity, etc . . .”

    He uses the 12% of all oil used during the lifetime of the vehicle to calculate 42 barrels.

    On the same page Matt Savinar calculates an average of 27 barrels of oil. Electricity, etc. extra.

    That would knock the ‘time to recover oil’ down to less than three years and about ten years of savings enjoyed.

  17. dhogaza says:

    No, not “salvage” in the usual sense. In the auto business salvage means reused. Usable parts are pulled to keep similar models running.

    With this program the engines must be destroyed. A substance (I think containing silicon) is run through the engine until it is no longer usable.

    Yes, I should’ve said “except for the engine”.

  18. Pete O'Connor says:

    #16 — Savinar is also using a figure based on total energy equivalent and not actual oil. “How many barrels of oil does it take to equal the energy consumed during 10% of a car’s lifetime? Let’s see:”

    I’d think that the embodied energy in a new car is mostly from the steel production, which is in turn mostly coke (from coal) and electricity.

  19. Bob Wallace says:

    Pete #18, yes. So the break even point of oil used vs. oil saved drops even lower.

    This “more energy will be used to make the new car than is saved” seems like a very bogus item.

    Scanning the Edmunds list of eligible cars I saw none more recent than 2003 and most were ‘last century’. Given an average life expectancy of 13 years lots of these clunkers were going to get replaced anyway. That energy would have been expended even without this program.

    Cash for Clunkers has apparently steered lots of people toward more efficient vehicles. And it surely has given the car business a shot in the arm when it was so badly needed.

  20. Sasparilla says:

    It is really great when a program comes out and does much better than expected – I was really expecting it to have people buying terrible large cars, but the people aren’t (for the most part). A nice little victory, time to sit back and savor it for a little while.

  21. Scatter says:

    How far were those clunkers driven each year and how far are the new cars going to be driven? I suspect the former were driven a lot less than the latter will be.

    [JR: The rules don’t allow real clunkers. People were turning in SUVs and light trucks that you can’t get a good trade in on.]

  22. Bob Wallace says:

    Scatter – given that most cars/trucks are driven into the ground by someone before they get crunched, it’s a fair guess that gas wasting guzzlers are going to their deaths sooner than they otherwise would.

    Whether vehicles are driven more or less miles per year as they age seems irrelevant.

    Nice thing is, since the poorest of us typically drive the oldest, highest mileage vehicles, down the road poorer people are going to have more high mileage choices than they otherwise would have had.

    Don’t you really enjoy win-win-wins?

  23. Scatter says:

    I don’t think it’s irrelevant. Annual CO2 emissions and fuel consumption are important.

    I’m just saying that it’s unlikely to be as simple as average mileage x mpg improvement = saving.

  24. pete best says:

    A car uses 20% of it lifes energy usage in making it according to figures with an average mileage of 12000 a year and averge MPG of 22 over 12 years (the avergae lifetime of a USA car).

    (I am from Europe and not and American). Your oil usage is such compelling reading through. Peak oil would effect you guys most so you all need to try and halve your oil consumption. Can it happen through efficiency gains and new technologies in time to avert <2C climate change and the economic effects of peak oil? 6.7% drop means a 30 Mb/d day come 2020

    85,000,000 (2009)
    42,484,975 (2019)

    Huge falls at 6.7% drop per annum.

  25. pete best says:

    Oh yes I forgot. This peice on algae oil might just be able to achieve some very good results and to some degree help to rescue our plight if peak oil is right and those falls to occur.

    3000 Gallons per acre in a 2 acre plot for which I am presuming that the yield will be one crop per annum. 1000 acres would yield 3 million gallons if scaleable and successful. It even take water and CO2 from a coal bed methane plant. Nice

    1 million acres will yield 3 billion gallons of oil. 20 Mb/d x 42 = 840,000,000 a day. How many acres of land in the USA alone would yield enough biooil/algoil etc ?

  26. George says:

    How many times will the auto industry be bailed out with our money? This money could have been shared by all of us in a refund.