Among other things, the Jones Act mandates that ships carrying cargo and passengers between U.S. ports must be built in the United States and owned by Americans \u2014 effectively prohibiting foreign-flagged ships from this domestic trade. The vessels are also required to carry U.S. crews.<\/p>\n
The law can be waived in the \u201cinterest of national defense,\u201d the U.S. Maritime Administration notes, either through the Homeland Security or Defense Department.<\/p>\n
The Jones Act also was intended to ensure that the U.S. had its own merchant fleet in case of war. It’s been strongly supported by some U.S. shipping companies, national security advocates and organized labor. But cutting out foreign competition has also driven up the cost of carrying cargo domestically.<\/p>\n
U.S.-flagged ships are generally more expensive to both operate and build than foreign ones. And those costs are especially damaging to states and territories that are supplied by sea, such as Hawaii and Puerto Rico.<\/p>\n
Why is Trump waiving Jones Act requirements now?<\/h2>\n
Oil prices have spiked and swung rapidly since the start of the Iran war. Nearly\u00a0all tanker movement in the key Strait of Hormuz\u00a0remains at a halt, which has led major oil producers across the Middle East to cut production. Commercial ships \u2014 which, beyond fuel, haul cargo from pharmaceuticals to computer chips \u2014 have also been stalled at sea or faced attacks themselves.<\/p>\n
That’s pushing up prices for businesses and consumers worldwide. Brent crude, the international standard, was trading at nearly $109 a barrel on Wednesday, up from roughly $70 before the war began. And U.S. crude is now at about $98 a barrel. U.S. drivers have already seen prices at the pump jump dramatically \u2014 with the national average for regular gasoline topping $3.84 a gallon Wednesday, per AAA, up about 86 cents from before the war.<\/p>\n
All of this has left countries scrambling for more supply and alternative shipping routes. The White House confirmed last week it was looking into suspending Jones Act requirements, which Trump called \u201crestrictive.\u201d<\/p>\n
White House press secretary Karoline Leavitt said Wednesday that the Jones Act waiver would help \u201cmitigate the short-term disruptions to the oil market\u201d during the Iran war and would \u201callow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports.\u201d<\/p>\n
Could suspending requirements help bring down gas prices?<\/h2>\n
Many factors contribute to prices at the pump. Opening up domestic shipping routes to foreign-flagged vessels may bring some relief in the form of expanding transportation options, but it isn’t a sweeping fix.<\/p>\n
The Center for American Progress estimated last week that waiving the Jones Act would decrease East Coast gas prices by a modest 3 cents, but potentially raising costs on the Gulf Coast. And the move \u201cwould also sideline American shipbuilders and workers and allow the oil industry to continue to profit from high prices while reducing transport costs,\u201d the research and policy think tank said Friday.<\/p>\n
The U.S. is looking for additional ways to boost oil supply. Also on Wednesday, the Treasury Department eased sanctions to allow U.S. companies to do business with Venezuela\u2019s state-owned oil and gas company. And the Trump administration has announced it will temporarily free up Russian oil from U.S. sanctions, too.<\/p>\n
Last week, the International Energy Agency also pledged\u00a0to release 400 million barrels of oil available\u00a0from its member nations\u2019 stockpiles, the largest volume of emergency oil pulled in the organization\u2019s history. Trump, who previously downplayed the need to tap into reserve oil, confirmed that the U.S. would pull 172 million barrels from its Strategic Petroleum Reserve over 120 days as part of the IEA’s effort.<\/p>\n
Still, analysts maintain this will be a short-term bridge. Refineries also buy crude oil in advance, and it takes time for new supply to trickle down to consumers. And, of course, it’s possible the pain of higher prices could increase further if the war drags on.<\/p>\n
The U.S. is a net exporter of oil, but that doesn\u2019t mean it\u2019s immune to global spikes. Oil is a commodity traded globally. And most of what the U.S. produces is light, sweet crude, but refineries on the East and West coasts are primarily designed to process heavier, sour product. As a result, it also needs imports.<\/p>\n","protected":false},"excerpt":{"rendered":"
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