The Jones Act Costs Four Cents a Gallon: Here Is How to Make It Two

The U.S. flag fleet is too thin, and the twice-extended waiver, set to expire on Sunday, makes things worse. It undermines what is left of a capability gap. The Jones Act, written after the First World War to ensure the country would not depend on foreign ships in conflict, requires any goods shipped between American ports be carried on American built, owned, crewed, and flagged vessels. Since March 17, foreign tankers have carried energy cargoes within America for one reason: not enough American ships.

This has an impact to security, because, although domestic in nature, the protected commercial capability empowers the projection of force. A currently programmed U.S. tanker carrying the military’s fuel will exceed the Navy’s twenty-year age limit for tankers in her next charter term. Last month, Military Sealift Command asked the market for a tanker to take her place. The market had no answers because of the lack of equivalent capacity. That fact should settle the Jones Act debate, instead it stokes ire.

Critics claim a law that left our country without ships is a failure; defenders say what is left is only there because of it. Both are right, and both have spent a turbulent century avoiding the quantum. What does the law cost, yield, and what closes the gap between the two?

A cost is always measurable. An international tanker delivers gasoline from Rotterdam to New York for about 7 cents a gallon. An American one from Houston is almost 11 cents. The four-cents-a-gallon difference is the price of the Jones Act on the fuel market, roughly 1% of what drivers pay at the pump. It is a 59% freight-cost premium.