There has been much excitement of late in the press regarding the "Cash for Clunkers" program which has proven so popular that it has run out of money in just a few weeks. From an energy standpoint the program would appear to be a major win all around. Consumers switch from gas guzzlers to high mileage vehicles, the auto industry gets a much needed boost, and the administration can point to at least one set of economic incentives that seems to be capturing the genuine interest of the public. What's not to like?
Actually, I suspect there are a few things not to like. The concept of trading in old low mileage junkers for modern high mileage cars is promising. However, so far, a lot of that promise was wasted. Why? Because the new cars we are helping to subsidize with our taxpayer dollars are often nearly as bad as the cars they started with. With this program one can get a $3500 subsidy for getting a car with only a 1 mile per gallon difference from the old clunker. Now how is that going to have any significant impact on our gas usage in this country? In fact to get a $4500 rebate you only need to do 2 miles per gallon better than your old car. Big whoopee!
If we really want to see this program have a significant impact on gas usage in this country we have to shoot higher than that. What we have right now is really a thinly veiled program for subsidizing the auto industry. That in itself has its merits, though given the fact that our own auto companies don't produce a lot of high mileage cars who we really are subsidizing is the Japanese auto makers. There is no requirement that the trade-in be an American car which I find rather surprising, particularly given the fact that the government owns two of the three major US auto companies. I suspect Japan and Korea could claim protectionism but give the fact that the US government is essentially in the auto business that claim seems a bit thin.
There is also a lot of question in my mind as to what happens to all of those gas guzzling clunkers. The government plan calls for the engines and drives trains to be destroyed though the rest can be used for parts. This makes me wonder if in fact a lot of used car types won't just go get an old engine from the junkyard, one with equally poor mileage, and just replace it. There are a lot of car enthusiasts who would love to revive these old cars which would put us right back were we started from. Hmmm,maybe I am looking on the negative!
OK, so lets look on the positive. The program has run out of money after only a couple of weeks. However, the Democrats are eager to refund it for another $2 billion given that, in their mind, it has been a success. The Republicans of course are opposing it, nothing new there. However, there seems to be some movement within the Republican party to re-vamp the program rather than kill it outright, including requiring higher gas mileage for the trade-ins. This may be one of the very, very few instances where we find ourselves wanting to side with the Republicans.
This program requires some major rethinking. Why not create a sliding scale where nobody gets anything unless there is at least a 10 MPG increase in mileage and only pay above $2000 if there is a 15 MPG improvement. That way buyers will be forced to look at cars with mileage in the 30's and 40's per gallon which will almost surely mean very small cars, hybrids or efficient diesels, all of which would represent an improvement that would actually matter. Also, lets actually junk those cars, all of the car, not just the engine. That way there is less incentive for car enthusiasts to try to salvage the old junkers which frankly we don't want on the road anyway.
If none of these ideas prove politically feasible how about something that would really make a difference. Take the $2 billion dollars and give it to NREL to research building better batteries for electric cars. Then we wouldn't have to worry about MPG ever again!
Editor
Actually, I suspect there are a few things not to like. The concept of trading in old low mileage junkers for modern high mileage cars is promising. However, so far, a lot of that promise was wasted. Why? Because the new cars we are helping to subsidize with our taxpayer dollars are often nearly as bad as the cars they started with. With this program one can get a $3500 subsidy for getting a car with only a 1 mile per gallon difference from the old clunker. Now how is that going to have any significant impact on our gas usage in this country? In fact to get a $4500 rebate you only need to do 2 miles per gallon better than your old car. Big whoopee!
If we really want to see this program have a significant impact on gas usage in this country we have to shoot higher than that. What we have right now is really a thinly veiled program for subsidizing the auto industry. That in itself has its merits, though given the fact that our own auto companies don't produce a lot of high mileage cars who we really are subsidizing is the Japanese auto makers. There is no requirement that the trade-in be an American car which I find rather surprising, particularly given the fact that the government owns two of the three major US auto companies. I suspect Japan and Korea could claim protectionism but give the fact that the US government is essentially in the auto business that claim seems a bit thin.
There is also a lot of question in my mind as to what happens to all of those gas guzzling clunkers. The government plan calls for the engines and drives trains to be destroyed though the rest can be used for parts. This makes me wonder if in fact a lot of used car types won't just go get an old engine from the junkyard, one with equally poor mileage, and just replace it. There are a lot of car enthusiasts who would love to revive these old cars which would put us right back were we started from. Hmmm,maybe I am looking on the negative!
OK, so lets look on the positive. The program has run out of money after only a couple of weeks. However, the Democrats are eager to refund it for another $2 billion given that, in their mind, it has been a success. The Republicans of course are opposing it, nothing new there. However, there seems to be some movement within the Republican party to re-vamp the program rather than kill it outright, including requiring higher gas mileage for the trade-ins. This may be one of the very, very few instances where we find ourselves wanting to side with the Republicans.
This program requires some major rethinking. Why not create a sliding scale where nobody gets anything unless there is at least a 10 MPG increase in mileage and only pay above $2000 if there is a 15 MPG improvement. That way buyers will be forced to look at cars with mileage in the 30's and 40's per gallon which will almost surely mean very small cars, hybrids or efficient diesels, all of which would represent an improvement that would actually matter. Also, lets actually junk those cars, all of the car, not just the engine. That way there is less incentive for car enthusiasts to try to salvage the old junkers which frankly we don't want on the road anyway.
If none of these ideas prove politically feasible how about something that would really make a difference. Take the $2 billion dollars and give it to NREL to research building better batteries for electric cars. Then we wouldn't have to worry about MPG ever again!
Editor
2 comments:
I thought I'd never say this on the net; but I honestly love how you think. Not like average followers of the System.
Nice standpoint. I have to say I wouldn't have looked at what little difference in MPG there was.
Cool stuff.
Thanks for sharing beneficial information for enhancing our knowledge and please keep sharing.
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