America’s Maritime Future is Worth More Than a Penny at the Pump

We are approaching the end of America’s 250th birthday year, a year of reflecting on the vital contributions of American maritime to building and strengthening our nation. Against this backdrop, it’s ironic and unfortunate that this year has also brought a misguided assault on the Jones Act, the foundation of America’s maritime strength and independence throughout the modern era. The tradeoff? America’s maritime future for a political talking point and less than a penny a gallon in savings at the gas pump.

In March, shortly after the initiation of hostilities in Iran, the Trump Administration announced a broad waiver of the Jones Act under 46 U.S. Code Section 501(a), which allows the law to be waived when “necessary in the interest of national defense to address an immediate adverse impact on military operations.” At the same time, the Administration signaled that the real purpose of the waiver was to bring down domestic gas prices, which had risen substantially in the wake of disruption to the flow of oil through the Strait of Hormuz. Neither justification has held up.

The waiver has not been used to address a national defense emergency. The blanket waiver in place from March to August covered over 600 commodities, with waiver shipments consisting mainly of commercial fuels and crude oil and not military-grade fuels. Since the waiver mechanics shifted in August from broad blanket application to case-by-case review based on availability of U.S. vessels, U.S. Maritime Administration data has shown that most requests to move cargo under the waiver have been for ordinary commercial voyages with no clear nexus to emergency or military needs.  

A recent MARAD Vessel Availability Request highlights this reality starkly: On October 26, MARAD notified the American maritime industry of a shipper’s request to determine vessel availability to move one of five potential cargoes from Louisiana and/or Texas to 10 potential U.S. destinations, each also separated by the phrase “and/or.” Clearly, this was a case of commercial arbitrage, and not an emergency – much less a national defense emergency – anywhere.

Appropriately, the waiver request was denied. To be clear: the problem is not MARAD, which has performed admirably, with personnel standing watch 24/7 since August to process vessel availability requests. The problem is the waiver itself, which allows shippers and traders to engage in fishing expeditions that waste taxpayer dollars and chill domestic maritime investment.

Meanwhile, Americans filling up their vehicles can see plainly that waiving the Jones Act has had no meaningful impact on the price at the pump. 

This is unsurprising, as the price of gas is determined by factors including the global price of oil (which rises when key transit points like the Strait of Hormuz are choked off), refining costs, and taxes, while the domestic marine transport of fuel accounts for less than a penny a gallon.

The Jones Act waiver has not provided relief from the problems it was pitched as solving. What it has provided is a talking point for politicians eager to tell the American public in a volatile election year that they left no stone unturned, no lever unpulled, in trying to address the challenge of rising energy costs, even if this particular “solution” hasn’t made a dent.

The price of this talking point is dangerously high.

The political Jones Act waiver has enabled foreign vessels with foreign crews, answerable to foreign governments, to engage in U.S. domestic commerce, something American law does not allow for domestic trucking, rail transport, or air travel. Displacing American vessels and mariners on our domestic waterways creates dependence on foreign operators to keep our nation’s supply chain moving, while exacerbating national security risks as even Chinese and Russian vessels and crews take advantage of the opportunity to move our domestic cargo.

And in stark contrast to President Trump’s pledge to restore American maritime dominance, the waiver is doing serious harm to the American maritime industry.

Under the waiver, foreign carriers are not only displacing American vessels and mariners on domestic routes, but – as Rep. Salud Carbajal (D-CA), Ranking Member on the House Coast Guard and Maritime Transportation Subcommittee has observed – are doing so seemingly without oversight to ensure their compliance with U.S. tax, labor, safety, security, and environmental laws. This disparity creates a major comparative disadvantage for American companies playing by the rules and following U.S. law.

While the Jones Act waiver puts American companies at risk today by opening domestic voyages to foreign operators unburdened by compliance with U.S. laws, it also threatens the long-term strength and viability of America’s maritime industrial base. American vessel owners and shipyards cannot prudently invest capital in expanding their fleets and facilities  if Jones Act waivers become a workaround norm for routine commerce rather than the rare, emergency exception contemplated by law. And the next generation of American mariners and shipyard workers critical to our nation’s economy and security will not invest their time and talent in pursuing maritime careers if their jobs can be outsourced to foreign workers.     

A strong and resilient American maritime industry has been vital to America’s independence and global leadership for the past 250 years. We shouldn’t sacrifice that legacy for a political talking point or a penny or less at the gas pump. It’s time to end the political Jones Act waiver and put Americans, and America’s maritime future, first.

About the Author: Jennifer Carpenter is President & CEO of The American Waterways Operators.