Will Trump's Fuel Economy Rollback Cost Jobs?

Center-left political/culture magazine The Atlantic dropped an interesting piece onto the Web Tuesday. In it, author Robinson Meyer lays out a case, based in part on the Trump administration’s own writings, that the fuel economy rollback approved in late March will actually cost jobs and reduce the amount Americans drive.

Meyer piggybacks off his previous reporting, suggesting the Department of Transportation froze out the Environmental Protection Agency and the state of California while working on the rollback. He further suggests, by citing passages from the 2,000-page report the administration prepared on the rollback (officially dubbed Safer Affordable Fuel Efficient Vehicles, or SAFE), that 13,500 automotive-related jobs will be lost.

He also cites the report to suggest that cars will cost more, climate change will be made worse (and people will die because of that), and that Americans will drive less. Meyer’s piece notes that if one averages out the four cost-benefit analyses in the report, you get a net negative of $3 billion. He quotes one academic who says Trump’s numbers are wrong, but even if they weren’t, the new rules would have costs outweighing the benefits.

Meyer also makes mention of errors in the rollback proposal, including what he describes as “backward” math that somehow made the Obama administration’s stricter rules appear to lead to less-safe roadways.

I’m no proponent of Trump’s rollback, or rolling back the Obama rules in general, although as other TTACers have pointed out in our Slack discussions, the Obama rules had flaws that inadvertently incentivized automakers to concentrate on building crossovers with improved fuel efficiency as opposed to investing in and marketing high-mpg small cars that were already in their fleets. Some of these fuel-efficient cars disappeared from brands’ lineups, as they were costlier to build and/or less profitable than crossovers, and crossover-crazed shoppers seemed to notice fuel-economy gains in those vehicles while ignoring the compact sedan that achieved an even higher mpg rating.

Automakers got themselves into a bit of a regulatory pickle here by not being careful what they wished for. Whether the Obama-era rules truly were too onerous to achieve, or automakers simply wanted looser rules to reduce costs, they ended up with a set of rules that may do more harm than good – if Meyer and the critics he quoted are correct, and if the rule isn’t tossed aside by federal courts under the Administration Procedure Act due to its failure to pass a cost/benefit analysis.

This is a regulatory process that bears watching – especially since the rollback is supposed to start with 2021 model-year vehicles. Of course, the disruption caused by the coronavirus is already delaying launches of at least some of those cars, trucks, and crossovers. That adds an extra element of intrigue to an already important debate.

I don’t know if Meyer is right – I haven’t yet spent my copious quarantine free time digging through the 2,000-page document. Blame Netflix. One thing that does make sense: If automakers don’t need to invest in certain fuel-saving tech, that could reduce certain needs for labor, and possibly lead to fewer jobs.

If Meyer is correct, automakers may really have cause to remember that when it comes to this particular presidential administration, even seemingly straightforward regulatory change can take a twist into the twilight zone.

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