A "Cash for Clunkers" bill is working its way through Congress. The basic points of the bill are:
- Rationale: stimulate new vehicle sales to help employment and the US government investments in GM (GMGMQ.PK) and Chrysler.
- Buyers can get a federal voucher for up to $4,500 by trading in their vehicle for one getting better gas mileage.
- Estimates predict 1 million cars could be traded in. That means the total price tag could be $4 billion dollars. This money will come from the Department of Energy funding in the already enacted in the $787 billion economic stimulus package.
- To qualify, you must trade in any car that has been registered for at least 1 year and gets a federal combined fuel rating of 18 mpg or less.
- The new car ($45k or less) must be rated at least 4 mpg better than the old to get you a $3,500 voucher. 10 mpg better wil get you the full $4,500.
- For trucks or SUV's, you only need to get 2 mpg better for $3,500 or 5 mpg better for $4,500.
The bill is currently in House committee and is supported by Obama. Senators from both parties are preparing to co-sponsor similar legislation.
So, Obama and Congress want to spend $4 billion dollars to swap vehicles that run on gasoline to, you guessed it, vehicles to run on gasoline! When will we learn? We are importing 65% of our oil from foreign sources, yet nothing we are doing here is going to significantly reduce that amount, let along transition us away from this economic, environmental, and national security problem. We've all just experienced $145/barrel oil, $4.50/gallon gasoline, and the worst economic contraction since the great depression. What will it take for our elected policymakers to get a clue about our dangerous addiction to foreign oil?
A closer look at the bill's proposal is scarier still. An SUV owner is going to get $3,500 of US taxpayer money to go from a vehicle getting 18 mpg to 20 mpg? Are you serious? This is lunacy.
What we should be doing is giving people the full $4,500 simply to convert their existing vehicle to run on clean and cheap natural gas produced right here in the USA! Converting a million vehicles to natural gas would cut foreign oil imports by 110,000 barrels a day. More importantly, the money spent to fill up on natural gas would go directly to American natural gas producers as well as US landowners and farmers for royalty payments (as opposed to foreign oil providers). Good jobs would be created in the energy and automotive industry. We would also be setting the trend and strategy for the future: getting OFF gasoline and significantly reducing foreign oil imports.
Here is a list of vehicles which have already have EPA certified conversion kits available:
Additionally, Fuel Systems Solutions (NASDAQ:FSYS), an American company based in California, recently bought the rights to bankrupt Fuelmaker's "Phill", the home garage natural gas refueling appliance. The government's program should encourage adoption of this home nat gas refueling appliance by offering a voucher for it as well.
And, if Congress really wants to get serious about significantly reducing foreign oil imports, they would invite Toyota's CEO to Washington, DC to discuss how the U.S. government could entice Toyota into producing this electric/nat gas vehicle in mass quanities for the U.S. market. Better yet, combine this car with a Phill in a package deal for a $5,000 voucher. Now, that would be GOOD energy policy. Ten million of these cars on the road would reduce foreign oil imports by 1 million barrels a day ($25 billion dollars/year at todays oil price).