Newsflash: Better Fuel Efficiency is Good For Jobs

, research and deputy director, Clean Vehicles | April 4, 2018, 10:51 am EST
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For all the rhetoric coming from the administration around proposed rollbacks to the EPA’s vehicle emission standards, one would think that existing standards are somehow inflicting damage on our economy.  EPA administrator Scott Pruitt even gave a shout out to the “Jobs” signs at the event where he announced the EPA will be rolling back the standards.  But he’s got it all wrong. Keeping the standards strong is the best way to help grow jobs and support our economy.  Investing in technology advancement in the auto industry and saving consumers money on fuel – both outcomes of clean car standards – help to create jobs and make our economy stronger.

“I love these signs, particularly the ones that say ‘Jobs’.” EPA Administrator Pruitt, April 3, 2018 in announcing rollbacks to federal vehicle emission standards. Analysis by Synapse Energy Economics shows that keeping emissions and efficiency standards strong will create jobs.

A new analysis by Synapse Energy Economics examined the existing state and federal clean car standards currently on the books through 2025 to estimate their impact on US jobs and the US economy.  They found clean car standards will:

  • Add more than 100,000 jobs in 2025 with that number increasing to more than 250,000 in 2035.
  • Increase US gross domestic product by more than $13 billion in 2025 and more than $16 billion in 2035.
  • Save consumers nearly $40 billion in annual fuel costs by 2025 and $90 billion by 2035

Why the good news?

So wait a minute.  Doesn’t it cost money to make cars more efficient and less polluting?  Yes.  But just like that more efficient refrigerator might cost a little extra upfront, the lower operating costs more than make up for it, leaving more money in your pocket to spend how you like.

It turns out, savings from improved fuel efficiency adds up to billions of dollars every year. To date, Americans have already saved more than $57 billion dollars at the pump since 2010 because of clean car standards. And spending those savings on things other than gasoline is a whole lot better for our economy. (This is old news – I wrote about this in 2011).

In addition, the standards drive the auto industry to innovate. That means more R&D, manufacturing and engineering, creating jobs throughout the supply chain.

What did Indiana University get wrong?

In the administration’s final determination notice to revise the standards, they cite a study by Indiana University, paid for by the Alliance of Automobile Manufacturers, which concluded that clean car standards would cause near-term job losses, but be positive in the long-run.  However, Synapse’s analysis found both short-term and long-term economic benefits.  Why the difference?

Indiana University study’s macro-economic modeling assumes all consumers use cash to purchase their vehicle—in fact, only 30 percent do so—and assumes consumers do not factor fuel economy into their vehicle purchasing decisions, even though evidence shows consumers value fuel economy as well as price when purchasing a vehicle. These erroneous assumptions led to erroneous results that just don’t hold up.

Bottom line: Federal and state clean car standards drive the deployment of more fuel-efficient vehicles. Developing and building these vehicles creates thousands of new jobs, while the money consumers save on fuel can be spent on other goods and services, boosting the economy overall.

The administration’s actions to weaken standards will hurt US jobs and the US auto industry, despite what their signs say and how much Administrator Pruitt loves them (starting at minute 2:33).

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