More reasons to sink the Jones Act
For politicians looking at new and innovative ways to both combat high gas prices and lower inflation (while doing a solid for infrastructure and the environment, too), they should take a look at either repealing or, as Timothy Fitzgerald and Kevin Hassett write, doing and end around the Jones Act.
The 100 year-old Act says that only U.S.-built ships can operate between U.S. ports. The intention long ago? Protect the U.S. shipping and ship building industry. The actual result? A withered U.S. shipping industry that is incapable of addressing crises.
The work around – getting the Defense Department to waive the Act to allow foreign ships to carry essential goods (like oil and gas) between U.S. ports:
Hawaii, a state that knows a thing or two about reliance on marine shipping, has asked for a temporary waiver of the Jones Act. Hawaii was buying as much as a third of its oil from Russia, mostly to avoid the costs of the Jones Act. The recent executive order to block Russian oil imports means that now Hawaiians will disproportionately bear the cost of efforts to deprive Russia of export revenue. The U.S. Virgin Islands has a permanent Jones Act waiver, and Hawaiian leaders would like their residents to enjoy the same benefits. So would those in the Northeast and Puerto Rico.
But the benefits don’t end there:
The benefits of relaxing cabotage (shipping between U.S. ports) restrictions would be enormous, and not limited to energy industries. Offering lower-cost shipping would help the U.S. steel industry compete and assist virtually any industry that makes something heavy or that is best shipped in a container.
Makes sense, right? All it requires is the Biden administration being willing to end a bit of protectionism that’s long outlived its usefulness.