Study warns of higher consumer prices, job losses under current mpg rules
As President Donald Trump weighs easing U.S. fuel-economy rules, an automaker-funded study offered support based on looming cost increases for consumers and a short-term drop in industry employment.
U.S. consumers may pay an average premium of more than $1,800 per vehicle by 2025 due to tougher fuel economy and emissions targets, according to the Indiana University study, which was conducted over 18 months and funded by the Alliance of Automobile Manufacturers.
Employment losses will peak at about 150,000 in 2021, as consumers will shy away from buying costlier cars and trucks, said John Graham, a co-author of the study.
“Our findings don’t call into question the need for regulation but we found that the federal requirements need to be fine-tuned,” Graham said in a statement. “Due to unexpectedly low gas prices and tepid demand for electric and hybrid vehicles, the standards will have greater economic impact than envisioned when they were developed.”
The study adds to the brewing debate over fuel economy standards that’s intensified as the Trump administration considers revoking a decision to leave intact rules aimed at curbing vehicle emissions through 2025.
Eighteen automakers asked Trump last month to reinstate an evaluation of the rules, and Ford Motor Co. CEO Mark Fields warned in January that about 1 million U.S. jobs are at risk if standards aren’t aligned with market realities.
About a third of the initial job losses would be concentrated in a five-state area near the Great Lakes. The short-term pain will eventually give way to longer term benefits from consumers saving more at the pump, the study found.
The U.S. may end up with a net gain of about 150,000 jobs by 2031, Graham said in a phone interview.
The Indiana University report recommends several ways lawmakers could reorganize fuel-economy regulations, including by commissioning an independent assessment of California’s requirements that automakers produce and sell zero-emission vehicles.
The state’s program fails to curb much fuel consumption nationwide because manufacturers earn federal credits that make it easier to sell gas guzzlers elsewhere in the U.S., Graham said.