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Enviro-Mich message from "Anne Woiwode" <anne.woiwode@sierraclub.org>

E-M:  Michigan residents are clearly prescient when polled about higher CAFE
standards -- a report released by the Union of Concerned Scientists
yesterday found that increasing CAFO standards to 40 mpg will create a NET
of 11,500 jobs in the Auto State, more than ANY other state except for
California.  Below is their press release and report -- sorry for the
length, but they don't have these up on the webpage yet -- Anne Woiwode

FOR IMMEDIATE RELEASE:		Contact:  David Friedman (510) 843-1872, x302
Tuesday, February 19, 2002			  	     Rich Hayes        (202) 223-6133

Raising Fuel Economy Standards Could Create 182,700 Jobs in Construction,
Automobile, Service, Retail, and other Industries

	WASHINGTON, Feb. 19 – For more than three decades automakers have claimed
that installing safety, fuel economy and pollution improvements in their
products would be a "business catastrophe." Not only has history proved them
wrong, but a new economic analysis released today shows that increasing fuel
economy standards to 40 miles per gallon by 2012 would create a net gain of
over 182,000 jobs throughout the economy by 2015 – with more than 41,000 new
jobs created in the motor vehicles industry alone.

	"Putting technology to work means jobs, whether it’s in the computer
industry or the auto industry," said David Friedman, author of the new study
and Senior Analyst with the Union of Concerned Scientists. "Building safe
SUVs, better cars, and powerful trucks that go farther on a gallon of gas
will have a positive ripple effect throughout the economy."

	Moving to a 40 mpg average fuel economy standard will provide consumers a
net savings of more than $29 billion by 2015 because savings at the pump far
outweigh any added vehicle costs. The money saved would be spent throughout
the economy, generating 73,900 new jobs in the service industry; 31,900 jobs
in the finance, insurance, and real-estate industries; 29,900 jobs in the
manufacturing industry; and 22,500 jobs in the retail trade industry. The
automotive industry and their suppliers will see 41,100 additional jobs from
consumer re-spending and investments in producing better cars and trucks.
Thousands of other jobs would be created in agriculture, construction,
transportation, utilities, and government. Oil and associated industries
would see their job forecasts drop by 48,000 jobs, though these jobs would
be shifted to other sectors of the economy, yielding a net increase of
182,700 new jobs.

	"Fuel economy will be an engine for economic growth," said Friedman. "It's
time for the auto industry to stop crying wolf."

	The Union of Concerned Scientists used a macroeconomic model that includes
industry-specific data derived from a government designed analysis tool to
analyze 528 different industrial sectors and evaluate the potential job
impacts. Overall, states that use more gasoline and that have more industry
will gain the most jobs. California will add 23,600 jobs, Michigan 11,500
jobs, New York 10,100 jobs, Florida 9,700 jobs, and Ohio 9,200 jobs.

For a copy of the full report contact David Friedman at 510-843-1872, ext.
302. Founded in 1969, the Union of Concerned Scientists is a nonprofit
partnership of scientists and citizens combining rigorous scientific
analysis, innovative policy development and effective citizen advocacy to
achieve practical environmental solutions. UCS is on the web at

Fuel Economy as an Engine for Job Growth

The economic growth of our nation is tied to technological innovation. From
the steam engine and the automobile to the microchip, a “can do” attitude of
aggressive technology development has created millions of jobs and enormous
wealth. Now, however, many in the auto industry have stepped back from this
path. Technologies that could enable cars and trucks to go farther on a
gallon of gasoline are being left on the shelf.

The Union of Concerned Scientists estimated the effect that increasing fuel
economy standards to an average of 40 miles per gallon by 2012 would have on
jobs in the year 2015. We found that, in 2015, the benefits resulting from
investments in fuel economy could lead to 182,700 new jobs throughout the
country, with California, Michigan, New York, Florida, and Ohio topping the
list. In the automotive sector alone, over 41,000 new jobs could result.
Rather than constricting the industry, as automakers often claim, increasing
fuel economy could push technological innovation and lead to investments
that will benefit the auto industry and its employees.

Fuel Economy and Job Creation:
Investments in fuel economy technology will create jobs in two ways:

•	Consumer Re-Spending: Cars and trucks that go farther on a gallon of
gasoline will save consumers money – less money spent at the gas pump means
more money spent in other sectors of the economy. Some of that shift in
spending would go back to the automobile industry to pay for the fuel
economy improvement, creating create jobs in the motor vehicle sector. The
remainder would benefit a variety of industries, creating jobs in
manufacturing, agriculture, construction, and the service industry, among
others.  This is the opposite side economic equation from the oil price
shocks and subsequent recessions that occurred in the early 1970s, the late
1970s/early 1980s, and the early 1990s.

•	Automotive Industry Investments: To improve fuel economy, automobile
manufacturers and their suppliers would invest in new tooling and machinery,
putting the technology they have developed to work. These investments would
create jobs throughout the auto and finance  industries. Passing these costs
on to consumers – whose gasoline savings would outstrip the small increase
in vehicle price – would more than cover the costs of increasing the
workforce. When combined with jobs from consumer re-spending, these
investments could boost the motor vehicle industry by 41,000 new jobs.

Consider this example: A pickup truck with the same performance, comfort,
and safety available today could reach 31 mpg with existing technology. This
improved pickup would save its owner about $3,400 over the life of the
vehicle, compared to a retail price increase of less than $1,000.   That
leaves $2,400 to spend elsewhere in the economy. The $1,000 price increase
goes back to the automotive industry to cover investment and labor, with
room for increased profit. This represents a 4.3% price increase over 10
years for the truck – less than half the historical price increase of an
average passenger vehicle, which was about 9% from 1989 to 1999.

Analysis Methodology:
To estimate the potential employment impacts resulting from investments in
fuel economy technology, we used industry-specific data derived from a
macroeconomic impact analysis tool called IMPLAN (Impact Analysis for
PLANning).  This model incorporates interactions among 528 industrial
sectors using 21 economic variables to trace supply linkages and evaluate
how changes in spending impact employment, wages and salary, and the
national gross domestic product.  To estimate the costs and savings from
increasing fuel economy to 40 mpg by 2012, we used a vehicle stock model
developed by the Union of Concerned Scientists and a modified version of
cost/performance analyses by the American Council for an Energy Efficient
Economy .

With these costs and savings and the industry-specific data from IMPLAN, we
analyzed both the direct and the indirect investments generated by the
technology improvements, as well as the re-spending of fuel cost savings.
The analysis provided a national industry-by-industry breakdown of job
impacts for the year 2015. We allocated the national impacts among the
states using gasoline consumption and prices in each state, along with state
employment projections for each industry from the Bureau of Labor Statistics
and the Bureau of Economic Analysis.

Both industry-specific and state-by-state analysis results represent
estimates of the magnitude employment impacts based on historical
relationships.  These estimates are subject to changing economic conditions,
but indicate the strong positive directional effects of improving fuel

Sector-by-Sector Analysis:
Table 1 shows the results of the sector-by-sector analysis of raising fuel
economy to 40 mpg by 2012. By 2015, the motor vehicle industry could, we
estimate, add over 41,000 jobs, while the overall economy could gain more
than 182,000 new jobs.

Only the oil industry, and those industries tied to it, would be likely to
lose jobs. For example, the decline in demand for gasoline brought about by
improved fuel economy would shift 48,000 jobs from the industries
responsible for extracting, refining, and transporting crude oil and those
that transport and sell gasoline. These jobs might well shift into the
service sector, for example, which we estimate would see an increase of over
66,000 jobs.

Table 1. Projected Increase in Jobs from
Raising Fuel Economy Standards to 40 mpg by 2012
(by industry in the year 2015)
Industry	Net Increase in Jobs in 2015
Agriculture	7,700
Construction	12,300
Finance, Insurance,      Real-estate	31,900
Government	3,400
Manufacturing                    (excluding Motor vehicles)	29,900
Mineral and Resource Mining and Petroleum Refining	(24,900)
Motor Vehicles	41,100
Retail Trade	22,500
Services	73,900
Transportation, Communication and Utilities	8,100
Wholesale Trade	(23,200)
Total		182,700

State-by-State Analysis:
Our estimates suggest that every state would see some benefit from the
investments in fuel economy technology, as Table 2 shows. In some states,
the growth would be linked primarily to consumers re-spending the savings
they accrue from improved fuel economy. Other states could experience
additional benefits because they have a greater share of the industries that
see more job growth. Our results suggest that, in 2015, California would
show the largest growth with 23,600 jobs, followed by Michigan with 11,500
and New York with 10,100. Ohio, Florida, Texas, Illinois, and Pennsylvania
would not be far behind, adding 7,000 to 9,000 new jobs in 2015.

Table 2. Projected Increase in Jobs from
Raising Fuel Economy Standards to 40 mpg by 2012
(by state in the year 2015)
State	Net Increase in Jobs in 2015	State	Net Increase in Jobs in 2015
AK		200 	NC		5,800
AL		3,000 	ND		400
AR		1,700 	NE		1,100
AZ		3,100 	NH		800
CA		23,600 	NJ		4,700
CO		2,500 	NM		800
CT		2,400 	NV		1,200
DC		500 	NY		10,100
DE		700 	OH		9,200
FL		9,700 	OK		1,100
GA		5,100 	OR		2,400
HI		700 	PA		7,400
IA		2,000 	RI		600
ID		800 	SC		2,700
IL		7,900 	SD		500
IN		5,500 	TN		4,600
KS		1,400 	TX		9,100
KY		3,000 	UT		1,500
LA		1,300 	VA		4,700
MA		4,100 	VE		400
MD		3,300 	WA		4,000
ME		800 	WI		3,900
MI		11,500 	WV		800
MN		3,400 	WY		100
MO		4,100
MS		1,600
MT		500 	Total		182,700

Progress, not Empty Rhetoric:
The automobile industry often cites job-loss figures at odds with the
results of our analysis. Such statements are part of a long history of
claims that fuel economy, safety, and environmental improvements will have a
negative impact on jobs and the viability of their business. In 1970,
Earnest Starkman, then vice president of General Motors, argued that the
Clear Air Act Amendments of 1970, which required the installation of
catalytic converters in automobiles to reduce vehicle emissions, presented
“the prospect of an unreasonable risk of business catastrophe…” Going
further, he stated, “It is conceivable that complete stoppage of the entire
production could occur, with the obvious tremendous loss to the company,
shareholders, employees, suppliers, and communities.”

Similar arguments are being resurrected during the current debate over the
need to increase fuel economy standards. For example, an Associate Press
article on February 4, 2002, quotes Gloria Bergquist, spokeswoman for the
Alliance of Automobile Manufacturers, on a proposal to increase fuel economy
standards: “Light trucks will no longer exist under this,” she said. “It’s a
job killer. You can kiss your SUV, minivan and pickup goodbye.”

But these arguments are rhetoric, not reality – in fact, the low fuel
economy of our passenger vehicles makes us more susceptible to job loss and
recessions resulting from oil price shocks.

This study shows that increasing fuel economy standards means more jobs
throughout the economy, in every state, and in the auto industry.  It is a
question of putting production workers and engineers to work building better
cars, SUVs, minivans and pickup trucks rather than relying on dire
predictions to hold back necessary progress.

Cost and savings analysis performed by David Friedman, Union of Concerned
Macroeconomic modeling performed by Marshall Goldberg, MRG & Associates

For more information on this analysis contact
David Friedman, Union of Concerned Scientists, 510-843-1872

Anne Woiwode, Staff Director
Sierra Club Mackinac Chapter
109 East Grand River Avenue
Lansing, Michigan 48906
517-484-2372; fax 517-484-3108

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