Trump Faces November Shipwreck On American Energy Costs

An antiquated law called the Jones Act requires goods shipped by water in the United States to be transported on U.S.-built, U.S.-crewed, and U.S.-owned vessels. The Jones Act primarily creates a bottleneck for transporting U.S.-produced goods between U.S. ports because only 92 ships qualify to provide domestic ocean transportation.

President Trump alleviated this bottleneck for energy-related goods and fertilizer by issuing a Jones Act waiver earlier this year to prevent disruptions resulting from the U.S.-Iran conflict. He has extended the waiver twice. His most recent waiver expires November 15.

President Trump’s waiver launched 337 voyages from March through October, enabling deliveries of diesel, gasoline, jet fuel, crude oil, fertilizer inputs, and propane to Americans nationwide.

Jones Act supporters are trying to convince President Trump to end his waiver. If that effort fails, their backup plan is to weaken the waivers by imposing layers of regulatory red tape to make them less useful.

Initially, shippers only had to document their cargo and the national-defense justification for their voyages. The most recent waiver required shippers to get prior government approval before shipping goods.

This weakened the waiver by 75%. The first two waivers allowed for an average of two shipments a day. So far, the weaker waiver has allowed for only a shipment every other day.

Despite dire warnings from Jones Act’s defenders, no documented national security incidents have resulted from any of these waivers. Instead, the ability to transport energy and fertilizer has strengthened our economic security.

There is no reason to give shipbuilders special treatment compared to other manufacturers. The government doesn’t mandate that Americans use U.S.-built aircraft, trucks, or cars to transport goods, but those sectors are much larger and more successful than shipbuilding. And, unlike those segments of manufacturing, the shipbuilding industry primarily serves the needs of the U.S. Navy, not commercial customers.

While the Jones Act is supposed to improve U.S. national security, it does the opposite. Depriving Americans of the ability to use cost-effective ships built in South Korea, Japan, and Europe drives up the cost of delivering goods in the United States.

Exit polls from the recent midterm elections show that affordability remains a top concern for Americans. Continuing to provide strong Jones Act waivers is one of the easiest ways the White House can respond to voters’ concerns.

A Public Opinion Strategies poll commissioned by National Taxpayers Union found that 73% of Americans support Jones Act waivers that allow foreign ships to transport fuel, propane, and fertilizer between U.S. ports.

Waivers are especially important to U.S. agriculture and energy producers. The American Farm Bureau Federation requested a Jones Act waiver in March to mitigate high input prices, and the American Petroleum Institute reported that, in the waiver’s initial 76 days, more fuel was shipped from the Gulf Coast to the West Coast than in the prior 11 years combined. Ending the waiver would harm America’s farmers and represent a blow to American energy dominance.

Beyond extending the waiver, there are several ways the federal government could improve how the Jones Act operates. There could be automatic waivers when there are no U.S. vessels available to transport goods. For example, the United States is the world’s largest producer and exporter of liquefied natural gas (LNG), but, because there are no Jones Act tankers available to transport it, tankers can only deliver LNG to foreign customers. There could also be Jones Act carveouts for non-contiguous regions like Alaska, Hawaii, and Puerto Rico. The waiver process could be improved to make it easier to respond to national emergencies such as hurricanes or regional shortages.

In the meantime, President Trump should strengthen the waiver by extending it until the conflict with Iran ends. This would allow energy producers and others to better plan for the future. The government should monitor waiver shipments for legitimate security risks without requiring prior authorization for shippers to deliver the goods Americans need. The current Jones Act waiver expires on November 15. The time for President Trump to act is now.

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Bryan Riley is Director of National Taxpayer Union’s Free Trade Initiative.

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