Energy Policy:

Ceres' Gardiner discusses economics of stronger fuel economy standards

As the Obama administration prepares to release its draft rule on new fuel economy standards, what impact could the rule have on the economy? During today's OnPoint, David Gardiner, a senior adviser at Ceres, discusses new data pointing to projected job growth under the new standards. He also addresses criticism of the standards and discusses his expectations for the rollout of the rule.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is David Gardiner, senior adviser at Ceres. David, thanks for coming back on the show.

David Gardiner: Thanks for having me.

Monica Trauzzi: David, as the Obama administration prepares to release its draft rule on new fuel economy standards, Ceres has released some data on the economic impacts of these improved standards. Overall, you say that we could see jobs created, so walk us through the numbers and the job growth that we could see.

David Gardiner: Well, these studies show that not only could we see job growth especially in some of the manufacturing states like Ohio, Michigan, Indiana, but also across the country in different sectors outside of the automobile sector. Depending on where the administration comes out on the proposed rule, it could be as many as 700,000 new jobs created by 2030 and as much as $152 billion that consumers save as a result of the money that they don't have to spend at the pump because cars are more fuel efficient.

Monica Trauzzi: OK, so explain how using less fuel equals more jobs. What's the logic there?

David Gardiner: Well, the logic here, and it's been borne out by other studies that have been prepared by analysts on Wall Street, is that by designing more fuel-efficient cars people will be investing more in cars, that will increase the profitability of the automobile companies. And then, as the profitability goes up, automobile companies will hire more workers to build these cars. So, that's the essence of it. Some of the other job creation comes because consumers are saving so much money that they're not paying at the pump, that they have money to spend on other things and that's why you get job creation in other sectors of the economy.

Monica Trauzzi: Money to spend on other things like more expensive cars, which could happen if these vehicles are more fuel efficient?

David Gardiner: A portion of it gets spent on more expensive cars. But, again, you're saving money at the pump, so you get to spend more money shopping in retail, more money shopping for things like healthcare and other kinds of things that we care a lot about.

Monica Trauzzi: So, the focus is on the here and now across the country. When would we see jobs like these coming online? Would it be immediate or how far into the future?

David Gardiner: Well, these standards would take effect starting in 2017, so this would be a buildup of job creation over a period of time between now and the end of the next decade. But the Obama administration and the automobile companies and the states have already put in place a first-round of energy efficiency improvements for cars that are already beginning to take effect. And so we believe that the same principle will apply, that these new standards that are already making cars more effective today and more efficient will, in fact, lead to job creation now and probably are leading to job creation now. And this next set of standards that the Obama administration is announcing next week would continue that out through the next decade and beyond.

Monica Trauzzi: How does this proposed rule fit into the broader discussion on energy and the economy in the United States? Is this like a good news story for the Obama administration?

David Gardiner: Well, I think more important than it being a good news story for the Obama administration is that it's a good news story for the American public, in part because it achieves these terrific economic benefits, new job creation and consumer savings, but also because it achieves environmental improvements. We're reducing greenhouse gas emissions through these rules where they're saving consumers money. There just are so many benefits to the American public and to our economy and to our environment that it's a winner all the way around, which is part of the reason that I think it's had such strong support from practically everybody who's involved in this debate, the American automobile manufacturers have supported this approach, as have environmental organizations, state governments and others who have been involved in this, because everybody sees that it's a winner all the way around.

Monica Trauzzi: Auto dealers are not in favor of it. Why aren't they on board?

David Gardiner: Well, I'm not sure what the answer is to that, because it's a terrific benefit for their consumers. Their consumers are going to achieve the savings that come from having to go to the gas pump less frequently. So I think that the automobile dealers should be on board because it's a terrific thing for the customers of their cars, but they're not. Others, almost everybody else in this debate is.

Monica Trauzzi: All right, we're going to end it there. Thank you for coming on the show, nice to see you.

David Gardiner: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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