Oil For Jobs – Why Fuel Economy Standards Are Good for the Economy

September 21, 2011 | 12:35 pm
Don Anair
Deputy Director & Research Director, Clean Transportation

Jobs are pretty much the talk of the town these days. Politicians want to create them, the employed want to keep them, and the unemployed want to get them.  At the same time the vast majority of American consumers, nearly 90 percent according to this Consumer Federation of America Survey, think its important to reduce our oil consumption.

What if we could trade some of our oil dependence for more jobs?

Turns out we can.

In fact, spending $1 on almost anything in the U.S. economy is better than spending it on gasoline or oil when it comes to jobs!

Fuel economy standards, like those just finalized for heavy-duty trucks (discussed in my previous post) and the ones being considered for passenger vehicles, are expected to cut our oil consumption and save consumers thousands of dollars over the life of the vehicles. And they will create jobs.

There are two ways in which employment is affected by increasing the fuel efficiency of our nation’s cars and trucks. First, investments in advanced technologies creates jobs in the manufacturing sector, as companies hire more engineers and skilled workers to design and build more efficient vehicles.

But the largest impact on job creation comes from the savings consumers see at the gas pump. Achieving a 54.5 mpg standard could save consumers $50 billion by 2030 even after paying for the improvements, as noted in Michelle’s blog on the announced standards.

How do fuel cost savings turn into jobs?

I don’t know about you, but if I saved a few thousand dollars on gasoline, I think I could find some pretty good uses for it.  Maybe I would put some solar panels on my roof or send my son off to summer camp. My point is, most people are going to spend those savings on other things, and that’s where the jobs come in.

Source: Created from Bureau of Labor Statistics data

The Bureau of Labor Statistics evaluates the job intensity in different sectors of the economy based on each sectors economic output. Basically, this tells us how many people are employed for a given amount of money flowing through these sectors of the economy.

This chart compares how economic sectors stack up in job intensity. Turns out the gas and oil industry doesn’t employ a lot of people considering all the money flowing through their pipelines.

As a result, a shift in consumer spending away from the oil and gas industry to other sectors of the economy will have a positive effect on overall employment.  In other words, spending $500 on that extra college course does a lot more for job creation than spending it to fill up your gas tank.

How many jobs?

UCS released a study on the jobs impacts from the heavy-duty truck fuel econonmy and greenhouse gas standards and found an estimated 80,000 new jobs by 2030.  And CERES recently released a study showing the potential for 700,000 jobs from light-duty fuel economy standards.

So let’s get rolling on these standards. The sooner we make our cars and trucks more efficient, the better. For consumers, for jobs, and for our oil dependence.