Posted: June 3rd, 2010 by Militant Libertarian
A week or so ago, President Obama signed an order for the Environmental Protection Agency (EPA) and the Department of Transporation (DOT) to come up with fuel efficiency standards requirements for commercial vehicles. At that time, the phrase “120,000 new jobs” was thrown around a lot and I poo-pooed it out of hand. It has, however, been nagging me ever since and so I started some digging.
The report that the 120,000 new jobs is based on comes from the Union of Concerned Scientists (UCS) and CALSTART (report can be read here). The first sentence of the report’s press release abstract at that link, by the way, says those 120,000 jobs will be created “by 2030.” That’s quite a ways down the line for those in the unemployment lines today.
Regardless, that isn’t really what nagged me. What bothered me was that this 120,000 jobs thing was the favorite go-to headline for the press everywhere. It was used in most newspapers, every trucking rag I picked up, and more. Yet the number is a completely abstract and totally empty misnomer. It’s very doubtful that improving the fuel economy of big trucks is really going to create all that many new jobs. The key word there is “new.”
Let me explain.
How Jobs Would Be Created
First, let’s look at how jobs would be created under the assumption that trucks improve fuel efficiency by 20% before 2030. This won’t contradict my point, though, so bear with me. It’s important to understand that things will improve thanks to fuel economy and less dependence on foreign oil. My point isn’t that the UCS is totally wrong, just that they’re missing a few details.
Jobs will be created when trucking companies and owner-operators find themselves saving money every year because they are using less fuel. That, however, would likely be negated if oil prices increase as many believe they will. I remember the crunch of a couple of years ago when fuel prices were sky high and truckers were feeling the pinch. Whether this comes back or not is purely speculation, but if it were to happen again and diesel were to reach nearly $4/gallon as it did then, any gains from efficiency would be largely lost due to increased costs of fuel. If, however, fuel cost remains relatively constant over time, then drivers would see more money in their pockets. More money generally means more spending, which means more people have jobs to supply those purchases.
Jobs will also obviously be created by the companies who design, build, and maintain these new efficiency technologies. The types of tech will range the gamut, I’d bet, going from simple aerodynamics improvements to fuel additives, new fuels, and engine/electronics improvements. Not to mention wider-spread adoption of hybrids and other alt-fuel rigs.
These two things are where most of the jobs are likely to be created. New-hires to drive trucks could also be included in this, but I suspect that demand for trucking will not be growing exponentially along with the efficiency improvements, but will instead grow steadily as they have been for the past few years. Most trucking is heavily dependent upon consumer markets and even if our economy were to suddenly recover tomorrow and consumer spending to resume at pre-2008 levels, most of the driving jobs gained would be making up for those lost during the past couple of years and thus would not really be net gains.
How Jobs Will be Lost
This part isn’t meant to be depressing or overly-cynical, but I wanted to get the worst out of the way and end on a little better note, so I am going to look at this now instead of at the end.
Let’s say that by 2030, 50% of the medium-duty commercial fleet nationally is now hybrid-electric or all-electric. There are somewhere in the neighborhood of 1.5 million people currently employed by the commercial fleet and related industries (repairs, service, parts, manufacture, etc). If half the medium-duty fleet were to go hybrid and 25% of those were to be all-electric, then about half of the 1.5 million people in the commercial fleet industries (725,000) would be affected. (That’s an educated guess, I couldn’t find any numbers reflecting the actual number of medium-duty fleet service and sales personnel.) 25% of 725,000 people is 181,250 jobs.
So it’s feasible that if 25% of the medium-duty commercial fleet (nationally) were to be swapped for electrics, then up to 181,250 jobs would be lost since they are currently dependent upon standard petroleum combustion engine service, repair, and supply. Of course, the reality is that only some of these jobs would disappear and most would morph into other, similar work for the new electric trucking market. Not all of them, however, because electric vehicles have about 1/3 of the parts and components of a comparable internal combustion engine (ICE) vehicle. So 2/3 of those 181,250 jobs could potentially be lost (119,625 jobs). That number basically negates the UCS headlines.
Add to that the fact that using less fuel (and petroleum) means that those who harvest, transport, refine, and distribute that petroleum are also going to be facing fewer jobs. That includes everyone from the derrick man to the clerk at the truck stop.
Why It’s Still a Good Thing and a Winning Situation
After all of that doom-and-gloom, though, let’s remember the gains that will come. The jobs will probably be a wash, basically. I think that while some new jobs will be created thanks to the efficiency improvements, enough old-tech jobs will be lost that the whole thing will probably come out even. The only really new jobs that I can see are government regulators, and those are never really a good thing for the rest of us.
What we will see, though, are some other major gains. A 20% improvement in fuel economy (which is more than feasible by 2030) would mean a lot of oil that would no longer be imported into the U.S. Let’s crunch the numbers.
As of the latest data (2007), the U.S. uses about 21 million barrels of oil daily and produces only 6 of those (or about 28.5%). That means we use 7.665 billion barrels of oil annually and produce only 2.19 billion of those barrels. 71% of those barrels of oil go towards transportation. So 5.442 billion barrels of oil are used for transportation fuels annually. Of those, 26% are used for commercial transportation – or 1.41 billion barrels. Of those 1.41 billion barrels, 40.1 million of them are produced domestically.
If we reduced our consumption in the commercial sector by 20%, that would mean 28.2 million barrels of oil annually would not be used. We could assume that those would be imports saved, but if not, we would still be saving 20.16 million barrels of imported oil annually. Just from the commercial vehicle sector.
That, friends, is a lot of oil. It’s about 550 barrels per day (or more) of imported oil we’re not bringing in.
So while there may not be 120,000 “new” jobs created, there probably wouldn’t be any lost either and overall, we would lose something we can definitely stand to have less of: imported oil.