What is the Jones Act, and why did President Trump just waive it?

The Jones Act is a federal law dating to 1920 that generally requires goods shipped between two U.S. ports to travel on ships that are built in the United States, owned by Americans, and crewed primarily by Americans.

That becomes important when the United States suddenly needs to move a lot of oil, gasoline, diesel, or other products from one part of the country to another.

Because the war with Iran has disrupted global energy supplies and pushed fuel prices higher, President Trump temporarily waived those restrictions. That allows foreign-flagged tankers to carry fuel between U.S. ports, increasing the number of ships available and helping relieve transportation bottlenecks.

President Trump has now extended the waiver for another 90 days, although there’s a significant change: foreign vessels will no longer receive a blanket exemption. Individual voyages will be considered case by case.

Why do we have the Jones Act in the first place?

Supporters argue that it protects American shipbuilding, maritime jobs and a domestic merchant fleet that could be important during a war or national emergency.

Critics argue that those protections come at a price. U.S.-built ships are expensive, and there aren’t always enough eligible vessels available. That can make it more expensive—and sometimes more difficult—to move American energy between American ports.

The current energy crisis illustrates that tradeoff unusually well.

Will the waiver lower gas prices?

Probably somewhat, but don’t expect a dramatic difference.

Allowing more tankers to transport fuel can reduce shipping costs and alleviate regional shortages, but analysts cited in reporting on the waiver estimate the effect on gasoline prices at only pennies per gallon.

The much bigger factor remains the disruption of global oil supplies, particularly through the Strait of Hormuz, which normally handles roughly one-fifth of the world’s oil and liquefied natural gas.

The bottom line

The Jones Act is essentially a tradeoff between protecting America’s domestic maritime industry and keeping domestic shipping as inexpensive and flexible as possible.

President Trump’s waiver temporarily puts greater emphasis on flexibility. With energy markets under pressure from the Iran war, the administration is allowing foreign ships to help move fuel around the United States rather than strictly enforcing the normal domestic-shipping requirements.

It won’t solve the energy problem. But it gives the country more options for moving the fuel it already has.

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