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AMP Pushes Back on Oil Industry's Call for Jones Act Waivers

crowley tanker
File image courtesy Crowley Maritime

Published Jun 16, 2022 8:42 PM by The Maritime Executive

In response to the White House's accusation that the refining industry is not doing enough to bring down extreme gasoline prices, ExxonMobil has recommended a series of policy changes - including a Jones Act waiver.

"In the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions -- such as waivers of Jones Act provisions and some fuel specifications to increase supplies," ExxonMobil wrote in a letter to Biden. "Longer term, government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines."

In response, the American Maritime Partnership - the industry association for Jones Act shipping - noted that maritime transport costs represent a miniscule part of the cost at the pump. 

"The cost of gasoline is primarily driven by the price of crude oil and the processing of gas, which is spiking. The Jones Act is not a cost driver for increased gas prices, representing an average of less than one cent per gallon of the overall cost of gasoline. Of note, not a single Jones Act waiver has even been requested this calendar year," said Ku’uhaku Park, President of the American Maritime Partnership.

The back-and-forth is part of a larger debate about the soaring price of energy, which is driving historic inflation - a major cause for concern for the Biden administration. 

In a letter to seven leading U.S. energy companies on Tuesday, Biden suggested that excess profits were the cause of Americans' pain at the pump. He singled out not oil prices, but refining margins. “Since the beginning of the year, refiners’ margins for refining gasoline and diesel have tripled, and are currently at their highest levels ever recorded," said Biden. "At a time of war – historically high refinery profit margins being passed directly onto American families are not acceptable."

In part, the high margins are a symptom of a shortfall in refining capacity in the United States. American refiners have been pulling back on infrastructure investment for years, citing high costs and high regulatory burden in the U.S. market. Nine refineries have ceased operation since 2019, and one more will close later this year. 

In a parallel letter, the American Petroleum Institute noted that oil - not refining - accounts for 60 percent of the price of fuel, and global oil markets are extraordinarily tight. It called for the Biden administration to take action to encourage more drilling at home - including prompt completion of a five-year plan for outer continental shelf (OCS) leasing.