Auto Standards Rollback: Oil companies Win, Everyone Else Loses

In April, I blogged about the findings of a new analysis showing how state and federal standards to improve vehicle efficiency and accelerate vehicle electrification could impact jobs and economic growth. The results of the analysis were overwhelmingly positive.  Investing in vehicle technologies to reduce spending at the pump isn’t just good for drivers: the money invested in technology development creates jobs, and savings on fuel get pumped back into the economy.  So what would happen if instead we decide to take a step backwards and not invest in improving vehicle emissions and efficiency as the Trump administration is anticipated to propose any day now? Spoiler alert: Oil companies win and everyone else loses.

We worked with Synapse Energy Economics, Inc, to run economic modeling scenarios assuming the administration moves forward with what appears to be their preferred outcome: freeze federal vehicle standards at 2020 levels and undermine state authority which allows California to set more stringent greenhouse gas and zero emission vehicle standards that other states can opt into.

Compared to the standards on the books today, this rollback would:

• Increase consumer spending on gasoline by about $20 billion in 2025 and nearly $50 billion by 2035
• Economy wide, reduce employment by 60,000 in 2025 and 126,000 in 2035
• Reduce gross domestic product by $8 billion in both 2025 and 2035.

Rolling back federal and state vehicle emissions and fuel economy standards would reduce employment by an estimated 126,000 in 2035 as investments in the auto-sector are reduced and consumers spend more of their income on gasoline

All that of course is in addition to the energy security and pollution impacts from consuming billions of more gallons of gasoline in the coming decades.

Why is rolling back vehicle standards bad for the economy? 

Time and again the analysis of the economics of efficiency have been shown to pay off, especially when it comes to cutting oil use.  Prodding investment in automotive technology leads to job growth. The added costs of the technologies pay for themselves over the first few years of vehicle ownership paving the way for savings over the life of the vehicle, meaning people’s hard-earned money can be spent on things other than filling up their tank.

Rolling back standards, on the other hand, means forking over more money to oil companies in the form of higher gasoline bills. It also means abdicating leadership on automotive technology at a time when other countries, like China, are moving full steam ahead, putting our own automotive industry at risk.

No matter how the administration tries to spin it, it’s hard to see how going backwards on fuel efficiency and emissions standards is going to be good for the average American or our economy as a whole, let alone the auto companies who got this whole thing rolling to begin with.

The oil companies on the other hand?  Well that’s a different story.