President Donald Trump extended the waiver of the Jones Act – the law requiring U.S.-built and -crewed ships carry cargo between U.S. ports – for another 90 days despite criticism of the minimal effect on retail gas prices.
The move by Trump to allow international companies to transport gas, fertilizer and other commodities at market rates has been seen as an effort to generate positive economic news amid rising prices and inflation ahead of the mid-term elections.
But since the waiver began on March 17 – and through its May extension – U.S. pump prices remained elevated. By August 10, the national retail average price had eased to roughly $4.01 per gallon, or about 48 cents per gallon from the late-May level. But analysts do not attribute that decline primarily to the Jones Act waiver, characterizing its direct effect as only pennies per gallon, limited by high international tanker rates and relatively small volumes shipped under the exemption.
Other observers question the waiver’s mixed message to domestic shipping interests, at a time when Trump has made revitalization of U.S.-flag shipping and shipbuilding a centerpiece of his domestic policy proposals.
The waiver appears to have added marginal supply-chain flexibility, especially for Gulf-to-West Coast cargoes, where Argus estimated a savings of just 6.6 cents per gallon versus Jones Act tanker transport.
The controversial law has been attacked by pro-business interests, who claim its protectionist measures artificially inflate prices.
“President Trump’s decision to extend Jones Act relief for another 90 days acknowledges the burden the law has long imposed on U.S. security and commerce, as well as the significant benefits the waiver has delivered,” said analysts Colin Grabow and Scott Lincicome of the libertarian Cato Institute. “Since March, the waiver has unleashed domestic commerce that the Jones Act previously prevented, with more than 54 million barrels of energy products moving between U.S. ports on 200-plus voyages (and counting). In most cases, these voyages took place on vessels with no connection to U.S. adversaries like China and supplied American companies with American energy products that would’ve otherwise been imported at a much higher cost (if at all).
“These waiver shipments have exposed glaring gaps in the Jones Act fleet, including a lack of appropriate vessels to transport products such as bulk propane and asphalt, while delivering nearly 15 million barrels to the West Coast and enabling extraordinary new flows of American propane to Puerto Rico.”
They termed the waiver a “band-aid,” and said its economic and security benefits would scale from a broad, long-term reform or repeal of the Act.
Read more articles by Stuart Chirls here.
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