A confluence of events both in Hawaii and nationwide has led to a growing chorus of voices calling for either waivers from or reform of the federal maritime law known as the Jones Act.
The 1920 law restricts shipping competition between U.S. ports and has always been a problem, especially for America’s noncontiguous states and territories highly dependent on waterborne transportation, such as Alaska, Guam, Hawaii and Puerto Rico. But recently events such as the coronavirus lockdowns, the embargo on Russian fuel imports and intensifying inflation have made the inefficiencies and costs of the Jones Act ever more clear, as these following examples attest:
>> CBRE, the world’s largest commercial real estate services & investment company, wrote in its May newsletter that, “Planned increases in U.S. oil production are unlikely to bring relief to Hawaii, given restrictions in the Jones Act which make shipping fuel from the mainland U.S. cost-prohibitive.”
>> On June 15, ExxonMobil, one of the world’s largest publicly traded international energy and petrochemical companies, issued a statement advising President Joe Biden that he could help bring down fuel prices in the short term by enacting measures “often used in emergencies following hurricanes or other supply disruptions — such as waivers of Jones Act provisions and some fuel specifications to increase supplies.”
>> On June 14, economist John Phelan of the Center of the American Experiment wrote in the Star-Tribune of Minneapolis, Minn., that some “sensible” policies to help counter inflation would be to “promote domestic oil and gas; open ports; repeal tariffs; repeal Buy America rules; suspend Davis-Bacon; repeal new NEPA regs; repeal new ethanol rules, and suspend the Jones Act.”
>> On June 10, Ryan Young of the Competitive Enterprise Institute wrote at reason.com that “Energy prices … spiked due to Russian President Vladimir Putin’s invasion of Ukraine. They are staying high because bad policies are making it difficult to adapt, such as the 1920 Jones Act shipping law. …”
>> On June 9, George Liebmann, author and president of the Library Company of the Baltimore Bar, wrote in The American Conservative: “The nation’s merchant marine has been hobbled by the Jones Act for more than a century, damaging the economies of Alaska, Hawaii, and insular possessions.”
>> On June 4, Jesse Anderson Lujan, a former Guam senator, urged in Guam’s Pacific Daily News that the territory’s legislature and governor should ask the Biden Administration for a 24-month waiver of the Jones Act.
“The Jones Act,” he said, “mandates that only U.S..-built and flagged ships can carry cargo from one U.S. port to another. But planes made in Europe by Airbus can move cargo from San Francisco to New York and trucks made by Mercedes in Germany can carry oranges or any other goods from Florida to New York.
“The law was designed for national security reasons, as well as to protect the U.S. shipping industry. But a 24-month waiver for Guam will not negatively affect either issue. It will, however, provide shipping rate relief and reduce shipping costs to our island at a time when our island needs all the help it can to fight inflation.”
>> On June 3, reporters Chunzi Xu and Sheila Tobben wrote for Bloomberg News: “Jones Act freight rates to move fuel from the US Gulf Coast to East Coast are typically $1.5-$2 a barrel higher than similar international routes, enough to keep such movement largely limited. As a result, East Coast fuel markets are largely supplied via the Colonial pipeline, overseas imports and local production.”
And the list goes on.
With the America’s oceangoing Jones Act fleet and merchant marine dwindling by the day, it would seem prudent for the Jones Act lobby to start laying plans now to gracefully exit from its protectionist cocoon, compete for its customers like most other U.S. businesses and give the rest of us some genuine economic relief.