“Cash for Clunkers”: A Historical Analysis of the U.S. Quest for Independence From Foreign Oil

Abstract

One of the most ambitious efforts to improve the efficiency of the American ground transportation system was the Consumer Assistance to Recycle and Save (CARS) Act of 2009, commonly referred to as the “Cash for Clunkers” program. This Act directed the Secretary of Transportation to establish a program from which owners of vehicles could receive credit for trading in their vehicles and purchasing a more fuel efficient vehicle. The credit amount was either $3,500 or $4,500, depending on the amount of improved fuel efficiency. The Act initially appropriated $1 billion for the program, but because of the enormous public response, Congress appropriated an additional $2 billion to extend the program, tripling the potential number of transactions originally expected. This article summarizes previous efforts to reduce the U.S. dependence on foreign oil import. It then analyzes the effect of the CARS Act on the improvement in vehicle efficiency, the reduction in national gasoline consumption, the economic benefits and/or losses to the consumer, the energy return on energy investment (EROI) for the vehicles purchased under this Act, and environmental benefits. It also compares the CARS Act with previous initiatives to improve the CAFE standard. Finally, recommendations are made for improving the mileage of the American automobile fleet and reducing the amount and cost of imported oil.