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Posted: July 19, 2013

Sen. Cantwell criticizes attempt to erroneously link Jones Act to gasoline prices

During a hearing conducted July 16 by the Senate Committee on Energy and Natural Resources, Sen. Maria Cantwell (D-WA) presented pointed criticism of an attempt by one witness testifying before the panel to erroneously link the Jones Act to increases in the price of gasoline for U.S. consumers.

The committee conducted the hearing to explore how U.S. gasoline and fuel prices are being affected by the current boom in domestic oil production and the restructuring of the U.S. refining industry and distribution system. One of the six witnesses testifying before the panel was Faisel Khan, Citigroup Inc. managing director, integrated oil & gas research.

In his testimony, Khan attempted to create a link between gasoline prices and the domestic transportation of oil and petroleum products aboard Jones Act vessels. Among other things, Khan said: "As more domestic crude arrives in the Gulf Coast by pipeline and other coastal markets by rail, regulations such as (the) Jones Act increase the cost of delivering crude to U.S. ports and potentially increase the price of gasoline, most notably on the eastern seaboard. The result of increased crude by rail could result in more safety incidents. According to third-party data, rail has four times the incident rate than pipelines."

Later in the hearing, Sen. Cantwell engaged the witnesses who had testified in a conversation probing significant fluctuations in the price of gasoline with little or no apparent link to actual supply and demand, particularly on the West Coast.

Sen. Cantwell closed the conversation with a direct address to Khan: "Citigroup has been under investigation and paid penalties both for fraud in the mortgage market and is now under investigation by the FSA for manipulation in gas prices. And the fact that you come here and blame the Jones Act as some reason why we have high gas prices is just amazing to me."

Following the hearing, American Maritime Officers National President Tom Bethel commented on the now persistent push from foreign interests to gain access to U.S. coastwise energy transportation trades, which under the Jones Act are served by vessels built in American shipyards, manned by U.S. merchant mariners and operated under the U.S.-flag.

"Senator Cantwell's apt and timely remarks are greatly appreciated, as is her steady support of the U.S.-flag fleet," Bethel said. "As the bizarre and unfortunate effort to spin a false story around the Jones Act continues, it is very encouraging to see our elected representatives standing up and speaking truth about this increasingly important law. The Jones Act is critical to national defense, and to seagoing employment for U.S. merchant mariners - a job market that is steadily increasing in conjunction with domestic oil production."

Earlier this year, the Board of Directors of American Maritime Partnership - a coalition of which American Maritime Officers Service is a member and which American Maritime Officers supports - debunked similar attempts to erroneously link the Jones Act to the price of gasoline.

Among other things, AMP noted: "Crude oil and gasoline are transported into and within the U.S. on railroads, pipelines, foreign flag vessels, and American vessels. The price of shipping within the United States is a minimal factor in the overall supply chain. Accusations that American shipping is somehow the cause of the recent spike in gasoline prices are pure fiction. Gasoline prices have increased in every part of the country, even in those regions where domestic vessels play no part in the transportation."

In a letter dated July 18, the AMP Board of Directors thanked Sen. Cantwell.

"Your comments Tuesday are just the latest example of your historical leadership on American maritime issues," AMP wrote. "Washington State is one of our nation's 'top five' leading domestic maritime states, with an estimated 28,664 jobs, and an economic impact of more than $6 billion annually. But your leadership has always gone far beyond your home state borders."