The White House issued a 90-day extension of a waiver related to the Jones Act this week.
This follows an April announcement, in which the White House issued a 90-day extension to the Jones Act waiver, which was initially put in place for 60 days on March 18.
The Jones Act is a law that regulates shipping between United States ports and requires that any cargo shipped between U.S. ports must be transported on ships that are: built in the U.S.; owned by U.S. citizens; flagged, or registered, in the U.S.; and mainly comprised of crewmembers that are U.S. citizens or permanent residents.
An Associated Press report said that this new extension will go into effect on August 17, adding that “suggests that the U.S. might be preparing for continued price pressures as the Strait of Hormuz, a primary waterway for shipping oil and natural gas, remains effectively closed because of the war.”
What’s more, the AP report explained that the Pentagon will consult with the Maritime Administration to decide which voyages are exempt from the 1920 law containing the Jones Act, which was not the case in previous extensions. It also said that this new waiver will only apply to cargo that are sources of energy and commodities related to agriculture such as fertilizers and soybean oil.
Going back to the week of February 24, prior to the beginning of the Iran conflict, through Monday, August 10, the average price per gallon of diesel gasoline has increased from $3.697 per gallon to $5.257 per gallon, or around 30%, according to data from the Department of Energy’s Energy Information Administration (EIA). And the average price per barrel of WTI Crude has increase from $64.51 to $84.81 over the same period, a 31.5% gain.
As previously reported, when the extension to the Jones Act waiver was initially introduced in March—soon after energy prices saw sharp spikes, spurred on by the joint strikes launched by the United States and Israel on Iran, in an initiative geared halting Iran’s development of nuclear weapons—the Department of Energy Secretary Chris Wright said that by temporarily waiving the Jones Act, President Trump is ensuring that oil and other energy resources flow to Americans across the country even during times of disruption.
“This will help to ease short-term price impacts in the oil market as we work every day to lower prices,” noted Wright at the time.
Feedback to initially waiving the Jones Act for 60 days was not well received by a coalition of U.S.-based maritime labor unions in March—including: American Maritime Officers; American Radio Association; International Organization of Masters, Mates and Pilots; Marine Firemen’s Union; Marine Engineers’ Beneficial Association; Maritime Trades Department, AFL-CIO; Sailors’ Union of the Pacific; Seafarers International Union; and the Transportation Trades Department, AFL-CIO—in a joint statement.
“America’s maritime labor unions are deeply concerned about the Administration’s broad Jones Act waiver, which undermines our national security, weakens military readiness, and hands critical maritime work to foreign vessel operators,” it noted. “Jones Act waivers are intended to meet a strict legal standard and are traditionally granted only in narrow, clearly defined national security emergencies where U.S.-flag capacity is unavailable. Maritime labor has supported narrowly tailored Jones Act waivers in the past when they were obviously justified in the national interest, but this sweeping action does not meet that standard.
This decision will not provide meaningful relief at the gas pump. It has been plainly shown that the primary driver of gasoline prices remains the global cost of crude oil, and multiple analyses demonstrate that domestic shipping accounts for less than one cent per gallon. Any marginal savings will not reach consumers but will instead reward foreign shipping interests at the expense of American workers. Maritime labor calls on the Administration to reverse course and work with stakeholders on real solutions that address energy costs without sacrificing American jobs, national security, or the long-term strength of the U.S. maritime industrial base.”
When the first Jones Act waiver was announced, Jock O’Connell, economist, at the Pacific Maritime Shipping Association, said, at the time, that the logistical and bureaucratic obstacles of waiving the Jones Act for 60 days are daunting.
“Ships would have to be found or redeployed from existing services, and crews would need to be hired,” he said. “The Coast Guard will want to inspect vessels and certify officers. Environment regulations will likely preclude the use of many older ships and barges. By the time ship owner would be able to rise to the bait, the 60-days would have elapsed.”
