Maggie’s Oilfield Math

[brian64x]

This is an E-mail I received today...kinda makes you think.


Oilfield Math


Working in
the oilfield with others such as myself and a wealth of combined experience

we understand the accuracy of the following.


Think of it this
way:


A clunker that travels 12,000 miles a year at 15 mpg uses 800
gallons of gas a year.


A vehicle that travels 12,000 miles a year at
25 mpg uses 480 gallons a year.


So, the average Cash for Clunkers
transaction will reduce US gasoline consumption by 320 gallons per year.



They claim 700,000 vehicles so that's 224 million gallons saved per
year.


That equates to a bit over 5 million barrels of oil.



5 million barrels is about 5 hours worth of US consumption.



More importantly, 5 million barrels of oil at $70 per barrel costs
about $350 million dollars


So, the government paid $3 billion of our
tax dollars to save $350 million.


We spent $8.57 for every dollar we
saved.



I'm pretty sure they will do a great job with our health
care, though.

 

[460mag]

Re: Oilfield Math

A standing ovation, from me to you!

 

[Cegorach]

Re: Oilfield Math

Isn’t the perceived moral superiority of being “green” worth the difference though?

 

[RoughNeck182]

Re: Oilfield Math

I'm not defending the cash-for-clunkers program which I do think is questionable, hell I'm not even from the states but I think there is more to the story here to look at. Correct me if I'm wrong:

-wouldn't 224 million gallons of gas actually save 11.7 million barrels of crude oil or ~$800 million in saved fuel consumption for consumers for one year of the cars ownership if you use the standard of 19 gallons of gas per 42 gallon drum of crude?

-700,000 cars with an approximate $4000 rebate on each is $280 million dollars in consumers pockets (saved on the purchase of the new vehicle)

-that's $1.1 billion you COULD say the population got back, in one way or another, correct? where did the rest of the $3 billion ACTUALLY go anyway?

-wasn't this project meant as an economic stimulus to help the auto industry, as opposed to just GIVING more money to failing auto-makers? To me it was just like the bailout money except it comes with the 'feel-good' side-effect of saving consumers gas consumption and maintenance cost money from running older vehicles and lets not forget of course the 'percieved moral superiority of being "green"'...

Anyway I just thought this topic should be opened up a little more. I doubt anyone expected the gas mileage savings in one year to equal the cost of the program.

-John

 

[BradfromND]

Re: Oilfield Math

My biggest problem with this came from the fact that many of the people that drove "clunkers" had money problems. The government was supposedly trying to stimulate the economy but ended up talking people with money problems into spending money on a new vehicle.

 

[jasonk]

Re: Oilfield Math

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Brad from ND</div><div class="ubbcode-body">My biggest problem with this came from the fact that many of the people that drove "clunkers" had money problems. The government was supposedly trying to stimulate the economy but ended up talking people with money problems into spending money on a new vehicle.</div></div>

Exactly my issue with it as well.

 

[RADcustom]

Re: Oilfield Math

Just like the sub-prime mortgage plan convinced people to buy houses that they really couldn't afford.

 

[The Mechanic]

Re: Oilfield Math

The program was a failure. There were to many stipulations and restrictions on it. Furthermore when I "clunked" many of these vehicles by draining the oil and adding a few quarts of sodium silicate to the crankcase it was making the entire engine junk. Or at least any part that would have motor oil on it around it or through it.

It would have been a much better idea to have just tagged the vin as non registrable that way all engine parts could be used to repair other vehicles. Many of the ones that I did still ran well and would have been easily repaired and used by someone with low income to get to and from work. Many would have made good work trucks. Shame really.

 

[rwleonard]

Re: Oilfield Math

My BIGGEST problem with it is that the f-gov had no constitutional authority to do it, and nobody gives a shit that they did it anyway.

John- There's no macro-ecomomic difference between giving to the company and giving to the customers of that company. More importantly, the government did not creat that wealth itself, then give it to anyone, it first had to confiscate it from someone in the private sector who was productive enough to creat it, then give it to someone else who was unproductive enough to need it. Kinda like taking blood out of your left arm and putting into your right arm to cure anemia.


Rick

 

[RoughNeck182]

Re: Oilfield Math

Rick - I'm not backing the programs justifications for existence in any way, I agree about the waste of destroying these vehicles and the questionable idea of encouraging people to buy what they can't afford.... but I did think the original post was unrealistically simplified if one is going to try and quantifiably examine the economic effect here. As for macro-economic differences between giving to the company or giving to the customers of the company, I'm no economist so please inform me if I have a skewed/short-sighted view of this but I would rather see the money flow up through the consumers than go straight to a floundering company because I think it forces them to try to recoup their debt through their product lines (instead of a straight handout) which means squaring away their business practices so they can recoup on the sales, and the consumer walks away with a product. That should keep people in work to make these products right? What did anyone get from the money given to the banks? That money probably went straight to china I would have rather if it had funneled through the people that owed the bank in the first place, unproductive or not because it would have put the general population in a better spot before the money reached the bank and shipped out to the banks debtors overseas. Any thoughts on the economics here would be greatly appreciated!
-John

 

[rwleonard]

Re: Oilfield Math

Hey John,

The key thing to remember is that the government has/produces no wealth on its own. Its only legit function is to protect our rights, "secure the blessings of liberty" if you will, and is what a business would call "over-head." If the gov is to give anyone wealth, be it individuals or a group of individuals (i.e., a corporation) it must first confiscate that wealth from the individuals who produced it. How does taking wealth out of the economy in one spot and putting it back in another increase the total wealth in the economy?

While the car company and individuals might benefit from it while it lasts, somebody, somewhere else in the economy is worse off for having to foot the bill. The really irritating thing about it is that the gov isn't even taking wealth out of the economy anymore. It is now just piling debt on my kids' backs.

Rick