The initial blow will hurt, but the EPA's fuel economy rules will eventually create more jobs.
A new study finds that the EPA's current fuel economy standards could lead to about 150,000 job losses in the United States by 2021. However, the long-term outlook on the EPA's regulations should actually be beneficial to the U.S. job market.
The study, conducted by Indiana University and funded by the Alliance of Automobile Manufactures, found that job losses related to the EPA's fuel economy requirements could cost the U.S. about 150,000 auto-related jobs by 2021. The study bases that prediction on the assumption that consumers will shy away from new vehicle purchases as cars become increasingly more expensive in order to comply with federal regulations. It's estimated that the average new car price could rise by $1,800 to comply with upcoming fuel economy regulations.
However, savings realized at the pump from more efficient vehicles would ultimately have a positive effect on the nation's economy, the study claims. The auto job market would start to recover in 2022, with all 150,000 jobs restored by 2025. By 2031, another 150,000 jobs would be added to the auto sector.
Because the EPA's regulations are expected to have a positive impact on the job market long-term, John Graham, a co-author of the study, is calling for a revision, rather than a total scrap, of today's rules.
"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," he said. "Our findings don't call into question the need for regulation, but we found that the federal requirements need to be fine-tuned."
The Alliance of Automobile Manufactures, which is made up of more than a dozen automakers, is currently lobbying the Trump administration to revise U.S. fuel economy regulations that were put into place in 2012.