Antiquated Law Adds Billions to Fuel Costs

By William F. Shughart II

An obscure 1920 law is costing Americans billions of dollars a year in higher fuel costs.

The Jones Act requires that cargo shipped from one US port to another be carried on a US-registered vessel, built, owned and crewed by Americans. This protectionist law was designed to support a shipbuilding industry that no longer exists—but inertia and labor-union muscle keep it on the books.

The law mainly makes the news in time of crisis. It delayed shipment of road salt to New Jersey during a shortage last winter—happily, without incident, as the weather moderated before the Garden State had to shut down its highways for lack of salt.

In some crises, the president grants a waiver to allow emergency relief. President George W. Bush waived the Jones Act for a short time in 2005 after Hurricane Katrina hit the Gulf Coast; President Obama granted waivers to speed the release of strategic oil reserves (to counterbalance the loss of Libyan oil) in 2011 and most recently to get more gasoline into East Coast markets in the aftermath of Hurricane Sandy.

But every day the law adds to energy bills because it stops foreign-flagged tankers and barges from shipping among US ports. They can’t help move crude from Gulf Coast ports to East Coast refineries, or supply Florida with oil from Louisiana and Texas ports or ship oil between West Coast and Alaskan ports.
Without the Jones Act, in short, we’d have significantly greater domestic oil production.

...Repealing the Jones Act would generate multiple benefits. It would energize the production of shale oil, creating thousands of jobs and boosting the US economy. It would reduce US reliance on imported oil from problematic OPEC countries like Saudi Arabia and Venezuela, shaving billions from our trade deficit and enhancing US energy security.

And it would cut the price consumers pay at the pump.

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