The Jones Act, introduced in 1920 shortly after the end of World War I when the United States confronted a surplus of coastal shipping, was ill-advised when Congress passed the bill 105 years ago and is massively antiquated today. Worse still, in this moment as Iran lays mines in the Strait of Hormuz to disrupt global oil and gas supplies, the Jones Act is restricting the ability of US energy producers to respond to domestic needs to keep oil and natural gas prices manageable in New England, the West Coast, and other regional markets.
The reason the 1920 legislation is so problematic is that it requires all shipments of goods between US ports to be carried on US built and flagged vessels. Moreover, to qualify as a Jones Act–eligible vessel, ships must also be owned by a US company, manned with crews consisting of at least 75 percent US citizens, and comply with all other relevant US regulations.
Crewing requirements for US-flagged vessels are substantially greater than those needed for state-of-the-art oceangoing container cargo, liquefied natural gas (LNG), and oil tanker vessels. In addition, other regulatory requirements make building vessels in US shipyards much more expensive than in other countries such as South Korea and Finland. Furthermore, US crewing requirements, in conjunction with other legislative mandates, remove incentives for US-flagged ships to incorporate a wide range of labor saving and other technologies.
The Jones Act has been expensive for the US economy as it inflates transportation and other costs. Philip G. Hoxie and I, in our analysis of National Ballast Information Clearinghouse data on individual maritime shipments and cargo preference data, concluded that transport costs for Jones Act shipments of oil and natural gas between US ports would be much lower if bids for those shipments were open to competition from other vessels.
Join the conversation as a VIP Member