Jones Act Supporters Launch Campaign to End White House's Waiver

The Trump administration has waived the Jones Act for petroleum and fertilizer cargoes from March through mid-August, covering all U.S. regions and all ports. The waiver is unprecedented in length and scope, and U.S. domestic shipping operators are pushing back hard. This week, the American Maritime Partnership - the voice of the domestic maritime industry - launched a national advertising campaign aimed at convincing the White House to bring the waiver to an end.

“Clearly, President Trump has been led to believe that waiving the Jones Act is an effective way to lower gas prices, when we all see that prices have not gone down with the waiver. What the waiver does is put America last by allowing foreign operators and mariners to take American business and jobs,” said Jennifer Carpenter, President of the American Maritime Partnership.

Through May 21, about 60 waivers have been issued for foreign-flag vessels, according to RBN Energy. The largest share are for fuel deliveries from the Texas coast to California, a perennially expensive market for gasoline. California has lost substantial refinery capacity due to closures in recent years, and is heavily import-dependent; with the new access to foreign tanker tonnage, it has taken in more than three million barrels of petroleum products from Texas refiners since the start of the waiver period. Crude oil from the Gulf - including Strategic Petroleum Reserve barrels out of Louisiana - has also been shipped to refineries in California, making up for lost deliveries from overseas. California isn't the only beneficiary: Smaller numbers of foreign-flag voyages have occurred from the Texas coast to customers in Florida, Pennsylvania and Puerto Rico, RBN found, and a handful of cargoes have made it all the way north to Alaska.

But if the waiver has the power to bring down the pump price of gasoline, it has yet to demonstrate it in a visible way in California, where the largest share of waiver voyages have ended up. Average gas prices reached $6 per gallon in the state in early May, and have remained at that level ever since. Domestic crude oil prices have fallen by about 20 percent over the same period, from about $105 to about $87 per barrel.

Commodity research firm Argus says that the savings from shipping on foreign-flag tonnage amount to about six cents per gallon, not enough to materially affect the price at the pump. The pro-Jones Act Center for Maritime Strategy puts the number even lower. Meanwhile, according to AMP, the waiver is having significant negative effects on the future of the Jones Act fleet: the group says that it has prompted one investment platform to put a halt to a planned $1 billion capital raise for American domestic shipping, putting at risk another $2.6 billion in shipyard contracts.

"[The waiver] directly undermines the very policies that President Trump campaigned on and has championed – buy American, hire American, and strengthen our national might. The President should trust his instincts, follow his outlined policies and put America and our national security first," said AMP's Jennifer Carpenter in a statement.

The true test may be still to come. In the initial phase of the waiver period, international product tanker availability was tight, limiting domestic-voyage arbitrage opportunities due to chartering costs. Day rates on the U.S. Gulf MR index have since come down significantly, reducing the financial barrier to trading domestically with foreign-flag tonnage.