- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Why Does Obama Want to Destroy 265,000 Jobs?

Posted By Mike Brownfield On June 16, 2011 @ 6:06 pm In Ongoing Priorities | Comments Disabled

Just how many jobs does President Barack Obama want to destroy in the name of going green?

According to a new report by The Center for Automotive Research [1], the number could be as high as 264,500 jobs lost [1] just from new automobile fuel efficiency standards being considered by the Environmental Protection Agency. Meanwhile, the cost of a new vehicle could go up by nearly $10,000 and sales could be reduced [2] by 5.5 million vehicles annually.

DBusiness [3] pulls apart the report and finds that under the highest proposed mandate — which would raise the Corporate Average Fuel Economy (CAFE) from 35.5 mpg in 2016 to 62 mpg in 2025 — the following effects would occur:

  • The average increase in vehicle cost necessary to achieve the higher CAFE mandates range from $3,700 to over $9,000.
  • The higher mandates will increase vehicle prices that exceed the savings in fuel costs (over five years), even if gasoline costs $6.00 per gallon (in 2009 prices) for most scenarios under consideration.
  • Consumers will shun these technology costs by holding onto their used vehicles longer, especially if fuel prices are low (e.g., $3.50 per gallon), resulting in lower sales and a loss of automotive employment. Over 260,000 jobs may be lost if the highest mandate is passed and fuel prices stay low at $3.50 (2009 prices).

Hitting the 62 mpg average would be a challenge in and of itself. Analyst Sean McAlinden told Autoweek [4] that attaining that standard would “require a market that’s 64 percent plug-in hybrid.” And given that the cost of vehicles would rise by an average of $9,970 [4], McAlinden says that consumers would hold on to their old cars with lower fuel efficiency, defeating the purpose of the new regulations.

Environmentalists discount the report, calling [2] it an “industry-advocate propaganda piece” — despite the fact that the center that authored it gets “78 percent of its funding from federal, state and local governments, foundation grants and proceeds from conferences,” as The Detroit News’ David Shepardson reports [5].

And the sky-high 62 mpg mandate aside, auto manufacturers already see problems with the significantly lower 34.1 mpg mandate set to hit U.S. automakers in 2016. Heritage’s Nicolas Loris writes [6]:

[T]he new government regulations become a problem if it forces car manufacturers to produce vehicles no one wants to buy. Gloria Bergquist of the Alliance of Automobile Manufacturers said [7], “We have a hill to climb, and it’s steep, so we will need consumers to buy our fuel-efficient technologies in large numbers to meet this new national standard.”

Bob Lutz, Vice Chairman of GM echoed Berguist’s remarks saying [8], “We’ll have to force a lot of hybrids, which people may or may not pay for.”

That’s the name of President Obama’s game: forcing new regulations on American business and consumers whether they like it or not, no matter the price.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/06/16/why-does-obama-want-to-destroy-265000-jobs/

URLs in this post:

[1] new report by The Center for Automotive Research: http://www.cargroup.org/pdfs/ami.pdf

[2] reduced: http://www.detnews.com/article/20110615/AUTO01/106150378/1148/Study--Fuel-rules-to-hike-car-costs

[3] DBusiness: http://www.dbusiness.com/DBusiness/May-June-2011/New-Study-on-Fuel-Economy-and-Safety-Mandates/

[4] told Autoweek: http://www.autoweek.com/article/20110509/GREEN/110509845#ixzz1PTehLSuW

[5] reports: http://detnews.com/article/20110615/AUTO01/106150378/Study--Fuel-rules-to-hike-car-costs#ixzz1PTjDBxec

[6] writes: http://www.foundry.org/2010/04/07/could-new-epa-requirements-cause-headaches-for-automakers/

[7] said: http://www.washingtonpost.com/wp-dyn/content/article/2010/04/01/AR2010040101412.html

[8] saying: http://www.detnews.com/article/20100401/AUTO04/4010416/1148/AUTO01/Hybrid-car-field-gets-crowded#ixzz0kEfJ1qgh

Copyright © 2011 The Heritage Foundation. All rights reserved.