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Tougher Mileage Standards Could Fuel Economic Growth

— The idea is simple. Make cars more fuel efficient and they'll use less fuel and put less pollution into the air. A recent report by the group Next 10 found the cost savings will stimulate the economy and there is a direct link between environmentally friendly rules and economic activity.

"The higher the miles-per-gallon average and also the greater the reduction in the emissions the greater the job creation will be and the greater the overall impact will be on California's economy," said Noel Perry, Next 10 executive director.

Federal officials say better fuel economy will reduce the dependence on foreign oil and state officials say more efficient cars pollute less. The study said the ideal economic benefit would come from boosting fuel economy by 6 percent a year. That's considered an aggressive target. Even if the fuel standards only go up 4 percent a year, tens of thousands of jobs would likely be created.

"Money saved by reduction in spending on gas by households gets re-spent in the California economy," said Perry. "When you go out and buy a haircut, or somebody goes and buys a cup of coffee and those service jobs, retail or whatever, those jobs stay in California and that dollar gets multiplied."

The Next 10 study looked at five economic scenarios, from no standards to very large mile-per-gallon gains for the vehicle fleet. The report concluded higher environmental standards led to more economic activity. The report also found that job losses in fossil-fuel industries would be offset by other job gains.

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