AMP: Jones Act waivers for gas would create no impact at the pump and outsource U.S. jobs

The following article was released April 1 by the American Maritime Partnership, a coalition of which American Maritime Officers Service is a member and which American Maritime Officers supports.

A Jones Act waiver for gasoline would help oil traders, not consumers. There is no reason for a waiver now. A waiver is unnecessary. There is ample American vessel capacity today to move gasoline throughout the United States.

A waiver would not help consumers by reducing gasoline prices. The price of crude oil is by far the major driver in the cost of gasoline. In January 2022, it accounted for approximately 56 percent of the price of gasoline at the pump, a percentage that is significantly higher today given the increased price of crude. Recent dramatic increases in gasoline prices have overwhelmingly been driven by the worldwide increase in crude oil prices. The cost of ocean transportation is a small fraction of the cost of gasoline. Waiving the Jones Act could impact the cost of transportation by less than one cent per gallon on average, with no guarantee that any benefit would be passed on to consumers. Waivers of the Jones Act would simply put money in the pockets of oil traders and provide no relief to consumers.

Jones Act waivers encourage "disaster arbitrage." In 2012, a reporter for Reuters coined the phrase "disaster arbitrage" to describe situations where oil traders use Jones Act waivers to pocket millions of dollars. Under a Jones Act waiver, oil is transported on foreign vessels that pay no U.S. taxes, employ foreign mariners at sweatshop wages/conditions, and avoid other U.S. laws.

"The traders pocket the difference," Reuters said, never passing along any savings to consumers. During the Colonial Pipeline crisis last year and already during the Russian crisis this year, there have been multiple attempts at disaster arbitrage.

There is a well-established process specified by law to evaluate whether a waiver is needed. Federal law at 46 USC 501 lays out the conditions that must be met and the process that must be followed to grant a waiver. The required evaluation can be completed very quickly if necessary. If there is a real need for a waiver as the Russian war on Ukraine continues, the federal government can follow the established process quickly and efficiently.

Unnecessary Jones Act waivers outsource American jobs and undermine American security. Waiving the Jones Act is simply outsourcing American maritime jobs to foreign companies and foreign mariners, including from nations and to mariners who are not America's friends. (Russia is a leading source of mariners on foreign vessels worldwide.)

It is particularly surprising that some have called for Jones Act waivers as a result of the Russian invasion of Ukraine, a situation that underscores the importance of ensuring our nation's ability to protect our economic and homeland security and to support our national security interests around the world.

American military leaders have repeatedly emphasized the importance of the Jones Act to national security because it supports the U.S. domestic maritime industrial base. Now is certainly not the time to weaken U.S. economic, homeland, and national security capability by waiving the Jones Act unnecessarily.