Low gasoline prices could take away more than 1.1 million jobs in the U.S. if tough fuel economy rules are enacted, according to a Center for Automotive Research study.
The Ann Arbor, Mich.-based research center released the study yesterday analyzing nine different scenarios for possible gas pump prices and technology costs. The study found significant job loss would come from eight of the nine likely scenarios.
To hit a 54.5 mpg standard by 2025, corporate average fuel economy would need to double from 2012 to 2015. That, says the study, would bring a projected $200 billion cost to the auto industry, which could be made up in fuel savings. If fuel prices stay down, consumers are likely to stay with their preference for less fuel efficient SUVs and trucks; these vehicles made up about 60 percent of new vehicle sales in the U.S. this year through August, according to Automotive News.
If gas prices stay cheap, it will be a tough sell to get consumers to spend more on cars with advanced, fuel efficient technology, the study said. That could result in job losses up to, or over, 1.1 million. Companies feeling the pinch would be automakers, suppliers, car dealers, and businesses that depend on the workers’ spending.
“If the value of fuel savings to the new vehicle buyer falls short of the cost of mandated fuel economy technologies then U.S. automotive sales, production and manufacturing and retail employment will fall with serious consequences for the U.S. economy,” Sean McAlinden, lead author of the study, wrote in its executive summary.
The release of the study comes during a time of mid-term review of the fuel economy standards by the federal government and state of California. Regulators have until April 2018 to determine whether the 2022 through 2025 model year requirements are feasible or should be changed.
Consumers Union, the policy and action arm of Consumer Reports, this week submitted comments and a petition signed by nearly 32,000 consumers supporting the federal fuel economy standards. The Alliance of Automobile Manufacturers released a prepared statement today to a U.S. House Energy and Commerce Committee hearing opposing the 54.5 mandate. The industry group and its automaker members have been pressuring Washington to back off.
The CAR study used gasoline price forecasts from the U.S. Energy Information Administration, with pump prices potentially coming in at $2.44, $3.00 and $4.64 in 2025 dollars. The study also looked at three potential technology cost increases per vehicle – $2,000, $4,000, and $6,000, for automakers to meet the 54.5 mpg mandate. CAR also used an assumption from a previous study that consumers expect a payback on extra vehicle costs to be 3.4 years.
Out of the nine potential future scenarios that CAR used in the study, only one would result in increased auto sales and economic gains. That one scenario assumed the highest gasoline price and lowest vehicle cost.