And then there were 92: Jones Act fleet loses another ship, leaving Hawaii one oil tanker short

The following is a news release issued June 1, 2022, by the Grassroot Institute of Hawaii. It originally said the Jones Act fleet was down to 93 ships, including 56 oil tankers. Those numbers have been updated to reflect the latest figures from the U.S. Maritime Administration, which are 92 and 55, respectively. 

The retirement of the 37-year-old Houston is a sign that changes are needed so America can rebuild its U.S.-flag fleet and merchant marine

HONOLULU, June 1, 2022 >>  America just lost another ship from its ever-dwindling Jones Act fleet, an oil tanker named the Houston that counted the islands of Hawaii among its ports of call.

According to Grassroot Institute of Hawaii research associate Jonathan Helton, the 37-year-old Houston is now in India to be dismantled for salvage, reducing the number of Jones Act-qualified oceangoing commercial vessels to only 92, down from 257 in 1980.

As Hawaii residents are all too well aware, the Jones Act is that 1920 federal law that requires all cargo transported between U.S. ports be carried on ships that are U.S. flagged and built, and mostly owned and crewed by Americans.

A 2020 study commissioned by the Grassroot Institute of Hawaii found that the law costs Hawaii residents about $1.2 billion annually, or about $1,800 per average family.

The intent of the law allegedly was to protect America’s maritime industry so as to enhance the nation’s national security. However, after more than a century of such protectionism, America’s oceangoing Jones Act fleet comprises less than 1% of all oceangoing commercial vessels in the world, making a mockery of any claims that America’s merchant marine fleet is protected by the Jones Act.

According to Helton, in his new article “One less Jones Act tanker is signal to lift U.S.-build requirement,” the Houston was a regular visitor to Hawaii. Industry sources say a 9-year-old tanker named the Florida was called on to replace the Houston and has been serving Hawaii about once a month since November. But that still leaves the fleet in general one tanker short.

Last year, there were 17 tanker movements from the U.S. mainland to Hawaii. The Houston completed eight of them, with six other tankers making the remaining nine trips. The Houston also made 17 movements between Honolulu, Barbers Point and other ports in Hawaii.

Oil tankers make up 55 of the 92 ships in the Jones Act fleet. Through April 2022, four Jones Act tankers had completed nine movements from the mainland to Hawaii. But with one less Jones Act tanker in the mix, that could result in Hawaii residents paying just a bit more for mainland oil.

The Jones Act prevents foreign-flagged vessels from transporting oil from the U.S. mainland to Hawaii, and that, ironically, has made it cheaper for Hawaii’s sole oil refinery, Par Hawaii, to import oil from foreign oil sources.

In 2014, the Hawaii Refinery Task Force concluded that the Jones Act was a major reason Hawaii is almost wholly dependent on foreign oil, since the cost of importing oil from the U.S. mainland aboard Jones Act tankers — such as the Houston — is more expensive.

In March 2022, President Joe Biden banned Russian oil imports to the United States. At the time, Russia provided about 3% of all U.S. crude oil imports, but Hawaii had been purchasing between a quarter and a third of its crude from Russia in recent years.

Unless Par Hawaii has found some ready foreign alternatives to oil from Russia, then the need for Hawaii to import crude from the U.S. mainland will increase.

With the Houston gone, there is one less Jones Act-qualified tanker on which Hawaii can rely.

Keli‘i Akina, Grassroot Institute of Hawaii president and CEO, said today, “The loss of the Houston is more proof that the U.S.-build requirement of the Jones Act should be lifted, so companies such as Matson and Pasha and other Jones Act carriers can buy and use less expensive foreign-built ships to serve Hawaii’s needs.”

According to Helton, building a tanker in the U.S. costs roughly three to four times more than building one abroad. This, no doubt, weighed heavily on the owner of the Houston, SEACOR Holdings Inc., to not replace it years ago.

Helton concluded that, “If U.S. lawmakers ever hope to enhance Hawaii’s energy security, rebuild the nation’s oceangoing U.S.-flag fleet and revive its merchant marine, they will need to start thinking outside the box.

“So as Hawaii says aloha to the Houston,” he said, “perhaps it is time Congress said aloha as well to the Jones Act’s domestic-build requirement.”

To read Helton’s complete article, go here.

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