OP-ED: Strategic Petroleum Sale Highlights Weak U.S. Maritime Policies

Strategic Petroleum Sale Highlights Weak U.S. Maritime Policies

By Tony Munoz

Generations of inadequate maritime policies were highlighted again with the June sale of 30 million barrels from the Strategic Petroleum Reserve (SPR). While buyers were barred from exporting the oil, the entire sale, except for a 150,000-barrel barge load and a pipeline delivery, was transported by foreign vessel operators.

U.S. vessel companies were pushed aside by the obvious dilemma of political timing, economics and vessel capabilities. The Department of Energy (DOE) initially waived the Jones Act, but the political blunder was quickly rectified after maritime lobbyists protested.

But, DOE’s drawdowns dictated that only vessels with the capacity of 500,000 tons or greater could be used for transport, which ultimately rendered Jones Act operators incapable of being involved.  More importantly, there have been forty-six (46) Jones Act waivers since the June SPR sale, which is the most by any administration in the 91 years of the Act’s existence.

For U.S. maritime interests to be sidelined during this important energy event again puts a fine point on the lack of government support for the maritime sector. Uncle Sam collected about $3.3 billion from the sale, and the oil majors and oil traders will pocket huge profits from the purchases. Yet the continual beat-down of Jones Act operators has rendered U.S. maritime interests the “motherless child” on Capitol Hill and an impotent player in national emergencies.

Shipyards Are National Assets…Overseas

Recent feedback from a few editorials I wrote about the Jones Act and the lack of government support for the maritime sector included this comment: “The U.S. maritime industry cannot compete in shipbuilding or vessel operations with foreign companies.” Well, “unpampered” and “neglected” are two words that come to mind about federal support of the sector. Meanwhile, every other mode of U.S. transportation gets nurturing subsistence subsidies to invest and profit from. 

Sure, U.S. shipbuilding cannot compete against Asian countries where lower wages and standards of living prevail. Chinese yards built about 65.6 million tons or 43 percent of the world’s ships in 2010, but the living conditions of its workers are appalling. Shipyard workers throughout Asia are striking over safety conditions and wages, and many have said working environments are horrific and employment at the yards borders on slavery.

Moreover, Japan, South Korea and China – who together account for 90 percent of all commercial shipbuilding in the world – value their shipyards as national assets for economic growth and employment stability. Asian subsidies account for about 20 to 30 percent of each ship built. State support for shipbuilding and ship repair is the norm in all three countries, and in Brazil, Finland, France, the Netherlands, Norway, Portugal, Singapore, Spain and Vietnam as well.

But mention subsidies for U.S. yards to retool or train the next generation of workers and the discussion quickly degenerates into anti-U.S. maritime sentiments ranging from “U.S. labor can’t build ships” to “Foreign units are much cheaper.” The evidence of an open U.S. economy can be seen in the nation’s top employers being hospitals, restaurants, nursing care facilities and department stores, and its top trading partners being Canada (energy), China (cheap products) and Mexico (agriculture).

No Policies or Political Solutions

Why can’t the U.S. build ships and train a new generation of mariners? The U.S. sold off its last two deepwater fleets to the Danes and Singaporeans, who also control the U.S. intermodal infrastructure as well. So no one expects the maritime sector to compete in the deepwater due to the tax advantages enjoyed by foreign competitors and the fact that mariners’ benefits are covered by flag-line governments. It is not a level playing field.

“Government subsidies and intervention are not sound maritime policies” is a common theme about the U.S. maritime sector. Yet every other mode of transportation in the U.S. gets subsidies for infrastructure maintenance, including labor and energy offsets. Foreign shipping interests, large importing companies like Wal-Mart, and the agricultural industry would all like to keep it that way.

Beyond being the world’s dominant sea power, the U.S. shipbuilding industry has been totally neglected. More importantly, warship cost overruns and inefficiencies could be prevented with a strong maritime infrastructure. What has become painfully obvious once again is that there isn’t enough domestic tonnage to transport 30 million barrels of crude from the SPR. This is a national travesty, and the continued lack of support for the maritime sector will only marginalize America’s great maritime heritage and suppress a solely needed economic recovery.

The Department of Transportation (DOT) recently announced the formation of the Marine Transportation System National Advisory Council (MTSNAC) to advise the Secretary about shifting some freight off the highways and onto the inland waterways. While the advisory group is filled with distinguished industry leaders, how many more discussions, studies and research projects must the industry endure before turning America’s Marine Highway into a commercial reality?

The IRS, CBO and GAO have produced a number of reports saying marine transportation is the safest, cleanest and least disruptive mode of transportation. Yet the DOT budget for 2012 has ZERO dollars for maritime, which means there will be no policy movement until 2013 or later.

So when Johnny comes marching home again from the wars in Iraq and Afghanistan, he will find an unemployed nation with cities turning out the lights and un-paving roads due to budget cuts. Returning vets will find no job opportunities in the empty shipyards or be able to go to a maritime institution to learn a new trade because there are no ships. It’s a national tragedy that this nation’s maritime sector cannot transport 30 million barrels of crude. The U.S. is in desperate need of a maritime policy of any kind because its arteries are clogged and its air is polluted and its people are unemployed.  – MarEx
 

Tony Munoz can be reached at [email protected]