Saturday, January 29, 2022
Hawai'i Free Press

Current Articles | Archives

Friday, June 23, 2017
Meet the Jones Act: A 97-year-old regulatory law that's costing you money
By Michael Hansen @ 2:05 PM :: 3289 Views :: Jones Act

AEI Economist argues for repeal of the Jones Act

by Michael Hansen, Hawaii Shippers Council, June 22, 2017

The Washington Examiner published on June 22, 2017, the opinion-editorial, “Meet the Jones Act: A 97-year-old regulatory law that's costing you money,” advocating for repeal of the Jones Act especially in the contract of domestic energy production.

The author is Mark J Perry, a PhD in Economics, professor of economics and finance at the Flint Campus of the University of Michigan, and a visiting scholar at the American Enterprise Institute (AEI). Dr. Perry has previously written on the subject of the Jones Act and domestic energy.

Key excerpts:

On June 5, 1920, during President Woodrow Wilson's administration, Congress passed the Merchant Marine Act, which is also known as the Jones Act, ushering in a form of protectionism for the United States shipping industry and seafaring unions that would eventually drive up energy prices and conflict with the goal of achieving energy independence.

Now, 97 years later, the need for the Jones Act is sensibly being questioned and challenged as never before.

Why this debate about an obsolete and outdated statute – one that protects the domestic shipping industry from foreign competition? Specifically, the Jones Act requires that vessels carrying goods shipped in U.S. waters between U.S. ports must be built, registered, owned, and crewed by U.S. citizens and fly the U.S. flag.

Since it costs more to build and operate U.S. ships than it does in other countries, the statute has imposed significantly higher shipping costs on the U.S. economy as compared with more competitive international rates. For example, it costs about three times more to ship oil from the Gulf Coast to New England states than to ship the same amount of oil to Europe.

There are the traditional concerns arising from the Jones Act: higher shipping costs, bottlenecks of oil stored at U.S. ports waiting for tankers, higher oil and gas prices, increased reliance on imported oil, and the potential for slower response to hurricanes and oil spills. The century-old statute is raising anxieties that it's become a regulatory hurdle making it more difficult to use our country's rising oil and natural gas production from the shale revolution to reshape the balance of global and economic power.

Some maintain that the protectionist measure has stifled innovation in U.S. shipping, resulting in its long-term decline in the quantity, quality, and competitiveness of our domestic shipping fleet. The U.S.-flag fleet has shrunk from 16 percent of the global fleet in 1960 to less than 1 percent today.

But two new factors are now fueling the debate.

One is a shortage of Jones Act-eligible tankers available to ship oil from Gulf Coast ports to coastal refineries in Philadelphia and other cities. In 2000, there were 193 Jones Act tankers, but by 2014 only 90 remained. This has led to a backup of oil in Gulf Coast ports, which is hampering oil production all along the supply chain but especially production of unconventional tight oil in North Dakota's Bakken region and in the Eagle Ford shale area of South Texas.

According to Thomas Grennes, a professor emeritus of economics at North Carolina State University, there are currently no Jones Act tankers capable of carrying liquefied natural gas. This makes it prohibitively expensive to transport LNG to all domestic ports but especially ports in the noncontiguous regions of Hawaii, Alaska and Puerto Rico. The upshot is that Hawaii and Puerto Rico have been unable to benefit from abundant and cheap natural gas from the U.S.

There's no longer any economic reason to keep the anti-competitive and outdated Jones Act. Congress should repeal it.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT