That's What I Thought...
columnist: Gene DeNardo

Topic: Global Warming
Clunkers and the Environment

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Touted as a "green stimulus", what is the effect of the extended "Clunker" program on the environment? Will we all breathe easier or is just another special interest giveaway under the guise of the "common good"?

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by Gene DeNardo
(libertarian)
Tuesday, August 11, 2009

The "Cash for Clunkers" program has been touted as a "green stimulus" program. The idea is that older, less fuel efficient autos and trucks are replaced with newer, more fuel efficient vehicles. The $3500 to $4500 is intended to encourage buyers to purchase these new vehicles when they otherwise would continue to drive their "less efficient" clunkers. Is this legislation truly environmental or is it simply another industry subsidy paid for by the taxpayer?

The first facet of the program to examine is the fundamental exchange. The "clunker" you trade in must get 18 MPG or less. To qualify for a $3500 subsidy, replacement passenger vehicles must get 4 MPG over the trade in, light duty trucks 2 MPG and larger trucks 1 MPG [no, this is not a misprint!]. To qualify for $4500, passenger vehicles must get 10 MPG over the clunker, light trucks 5 and larger trucks 2. http://www.cars.gov/

Now, to justify the "green" slogan spin for the program, the above is all our representatives need. More mileage, no matter how small and insignificant justifies what will soon be a three billion dollar program. The earth will be better off, even if all the trade-ins fall under the 1 MPG improvement in the $3500 truck category. And, if a large percentage fall under the 10 MPG improvement? You would think we could continue clear cutting the Amazon without a shred of guilt. After all, a ten MPG improvement! The Arctic Ice Cap will soon reach Vancouver!

But, there are a few "other" considerations! In order to replace that fuel guzzling clunker with a fuel efficient new vehicle, we have to "build" a vehicle. It takes tons of resources, dug out of the ground, usually with inefficient, carbon spewing diesel machines, to mine the resources for one new vehicle. The resources must be transported, again usually with diesel trucks or trains to facilities that process the raw ore into a form that is conducive to manufacturing. Then it must be transported again to the manufacturing center and processed into forms useable by the vehicle manufacturer, such as wire or exhaust manifolds. Any of this processing can involve overseas transport to distant facilities, even multiple crossings. By the way, although not part of this article, most of this transportation itself is subsidized by governments.

Finally, the components arrive at the vehicle manufacturing center or one of the "contracting" assemblers. At this point, it is assembled into the new "efficient" auto or truck. But, it must be assembled by humans. And, humans must transport themselves to the facility and transport themselves home. Many of them are drastically overworked and only have time to run errands, in their vehicle, during lunch, rather than on the way home, when the trip could possibly be made more efficient.

All of these manufacturing processes, except for the primary extraction, take place in buildings. These buildings initially must be constructed, again out of mined resources, and they also must be heated and/or cooled and maintained. In these buildings are machines that aid the worker in the assembly process. They may make the process more "efficient", but they also must be assembled and they require energy, usually electrical, to function.

One of the "economic" problems of our domestic producers is the "fat" upper end of the hierarchy. All of the companies involved in the processes necessary to manufacture the vehicle have administrative and managerial sectors. These divisions need fancier, more expensive buildings to perform their operations. These building also need to be built, tempered and maintained. The autos the most important of the important executives drive have dark windows and are particularly fuel inefficient. They also fly around the world at will in their own private jets. The more vehicles sold, the more clunkers trashed and replaced by new vehicles, the more they fly around in their jets and drive around in dark windowed vehicles!

The finished vehicle now needs to be shipped usually by train or ship to the metropolitan area, where it is unloaded in a docking area and reloaded onto a hauling truck. From there the trucks haul about twelve vehicles each to the dealerships. Again, dealerships are comprised of land, buildings, workers, all using energy to do what they do; sell the new vehicles. As you can see, by the time the "new" vehicle has arrived at the dealership, it has already consumed quite a bit of oil and energy. That fuel efficiency rating that is printed in big numbers on the pamphlet taped to the side window of the new vehicle does not take one ounce of this consumption into the calculation.

This pre end user consumption though, could theoretically be calculated. It would be a very complex calculation but one aspect of it would be easy to determine and certain: the more miles the vehicle is driven, the more efficient the use of the energy in the manufacturing process becomes. Each mile added to the vehicle adds justification to the energy used in manufacturing.

The deliberate and subsidized withdrawal of a manufactured product before the end of its lifespan can never be justified environmentally unless its replacement, during its lifespan, consumes less aggregate energy and resource. In the case of a new more "efficient" vehicle, the energy and resource use incurred in the manufacturing process, the energy required to decommission the clunker and the fuel use per mile must be less than the "clunker's" fuel use per mile. The clunker's energy and resource use during manufacturing cannot be taken into consideration, since it has already occurred and the vehicle is still operational when taken out of commission. In simple terms, to justify replacement environmentally, the new vehicle must be far more efficient than the existing one.

Part of the program is the requirement that the clunker motor be purposely seized up to render it useless! The motor must not be reused. The folks that buy "used" motors are usually folks that can't afford a new or rebuilt motor. There are other considerations, but the primary motivation that the buyer of a used motor is to replace one that is in "worse" condition and therefore in worse environmental condition, with one that is in better condition. You could never consider a successful motor replacement as one that replaces a better motor with one that smokes more or performs worse, and buyers have this knowledge. By removing these motors from the market, supply is restricted and prices increased and the replacement of poorly functioning motors on the used market made more difficult.

If the environment was the true concern, the program would require the motors be tested and rated and any poorly performing engines scrapped. The good engines could serve to replace poorly functioning ones, making the air cleaner in the process. The need to produce rebuilt or new motors would decrease also, saving energy.

The rest of the vehicle must be scrapped. No recycled bumpers or quarter sections, it must be compressed and shipped to overseas mills. New steel is produced, but energy is needed for dismantling, compression, handling and shipping. And, cars also contain many non-recyclable components that become waste products when the body is scrapped. Not to mention toxic pollution.

Let's get socioeconomic for a moment. It is often the case that poor or at least "poorer" people tend to drive clunkers. Removing clunkers from the market lowers supply and raises prices of used vehicles, impacting those who already are at an economic disadvantage, while the subsidy of new vehicles benefits those who are more capable of paying full price. The clunker program is benefiting those who least need an advantage and hurting those who are more vulnerable.

Some older vehicles may not get the greatest mileage. As we mentioned, many people who own clunkers may be a bit more financially challenged than those who would own new vehicles. Wouldn't it make sense that they would also be more "thrifty" when it comes to purchasing gas? Even the poorest running gas hog uses less fuel parked against the curb than the most efficient vehicle that logs forty thousand miles a year on its odometer.

Consumers all have budgets, no matter their economic resources. A certain percentage of new fuel efficient vehicles will "adjust" their consumption to the same economic level as they had with their clunkers. Because they are now getting better MPG, they have a greater ability to purchase gas. So, a certain amount of the efficiency is lost to consumer preference. Others may drive the same and buy an extra steak or sock the money away. We do know it is the cost of the resource that primarily determines resource consumption, not a subsidy of the machine that utilizes the resource.

It is estimated that the extension of the clunker program will run through Labor Day [link edited for length] , at which time 3 billion dollars will have been spent. Certainly, car dealerships and manufacturers will have benefited from this 3 billion dollar transfer of wealth. The taxpayer, however, must pay. And aside from that which is not seen, the taxpayer now has 3 billion dollars less that could be spent on whatever he choose or didn't choose, what is evident is that the taxpayer now has to "earn" that money back.

There are approximately 140 million taxpayers in the United States. The clunker program will cost each of them about 21 dollars apiece. Not much, but about an hours work at an average wage. Work is a good thing. We provide for ourselves and others by working. But, needless work is a useless form of environmental extraction. What we do by definition always affects the environment. We will all need to work one extra hour, not including the interest we will most surely pay since Uncle Sam is always behind on his payments, to subsidize the car industry, which now has more money to spend, which again extracts from the environment!

So Uncle Sam says he wants to be green? The way to greenness is to "stop" spending our money! Collective spending is rarely green, other than the color of the printed paper.

Price determines consumption. Stop all government subsidies of the energy industries. Stop subsidizing the transportation sector. Get top dollar for all public owned resources, they are theoretically owned by all of us and that is who they should benefit, not special interests.

Quit government advantaging of energy and resource, no matter the type, and allow energy and the resource to reach its natural and higher price level. Remove the labor tax to enable business to make a level choice between the use of labor or resource.

Eliminate environmental regulatory agencies and replace with pollution tax and/or compensation. Efficiency will increase like nobody's business!

If we move in this direction, instead of promoting clunker programs, we will be so green Al Gore will be forced to write romance novels!

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©2009 Gene DeNardo, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Tuesday, August 11, 2009
Last modified: Tuesday, August 11, 2009

The views expressed in this article are those of Gene DeNardo only and do not represent the views of Nolan Chart, LLC or its affiliates. Gene DeNardo is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.

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