The Jones Act And What’s Wrong With Government

In The United States they’re called the Passenger Service Act and the Jones Act and they often prevent todays cruise companies from taking on and disembarking passengers in U.S. ports. The Passenger Service Act was created over 100 years ago to protect the American maritime business from foreign competition. It required that any ship carrying passengers from one American port to another American port had to have been built in an American shipyard, flagged in America and staffed with American citizens. The Jones Act does the same for carrying cargo.

Over the past few decades these acts have hurt America far more than they have helped. Here are just a few examples.

Exporting American Oil

It is a fact that companies are exporting American oil while at the same time importing foreign oil. Recently, even the White House has asked the oil companies to stop sending American oil overseas. The actual issue involves the Jones Act and it could be fixed by modifying or revoking that act.

The reason we export oil and import foreign oil is we don’t have enough “American” tankers. A recent survey found only 60 of them and that isn’t enough to mover oil from the fields to where it is refined. So because of the Jones Act the only option is to load foreign tankers at our ports and send them to foreign countries. While at the same time bringing foreign oil to American refineries.

The Deep Water Horizon

Remember the PB oil platform in the Gulf of Mexico that exploded? An environmental disaster of unimagined proportions. Norway, one of the worlds most successful offshore oil producers, quickly dispatched two of their ships designed to collect oil from the surface to the gulf to help. The problem was that the Jones Act prohibited those ships to “work” in American watersThe President (Obama) could have used an executive order for temporary suspension to allow them to work – he wouldn’t.

Hurricane Shuts Down Gulf Refineries

When hurricane Harvey shut down the oil refineries in the gulf in late August of 2017 the Trump administration suspended the Jones Act to allow oil from Texas and the gulf to be transported to the east coast refineries.

Alaska Ferry Service

Alaska’s ferry service is a lifeline for the state and is in serious trouble at least partially because of protectionist U.S. maritime laws. Ferries transporting vehicles, which is most such vessels in Alaska and Washington , are subject to the 1920 Jones Act, while those transporting people fall under the Passenger Vessel Services Act of 1886. Both laws mandate that vessels engaged in domestic transport be U.S.-built and there are literally no U.S. shipyards building those types of ships.

LNG For Puerto Rico And Hawaii

The Jones Act requires Puerto Rico to receive shipments of LNG as well as oil based fuels from the U.S. mainland rather than nearby Dominican Republic where prices are significantly cheaper. This causes residents of Puerto Rico to pay shipping costs far higher than they otherwise would. Hawaii has similar issues with energy products and both would save considerable on those costs should the Jones Art be revoked.

Who Still Benefits

The Merchant Marine -Since 1955 to today the number of U.S. flagged merchant marine ships shrank from over 1,000 to almost 200 today. With automation and the shrinking fleet the number of maritime workers has been reduced by over 85%. So these acts have not done anything to protect American jobs in over 50 years.

The problem today is that American shipyards no longer build this kind of ships. It’s is also too expensive to flag ships in America for a number of reasons and it is difficult to find American maritime workers.

Today the only real beneficiaries from the Passenger Service Act and the Jones Act are law firms and lawyers who specialize mostly in injuries at sea cases or maritime labor disputes. Another group involves companies that profit from the heavily trafficked and regulated sea routes between the mainland’s coast of the United States and the nation’s various island.

It is possible to fix this by offering incentives to change the dynamics of ship building and U.S. flag requirements but several attempts at legislation have failed over the years. Sen. Mike Lee (R-Utah) introduced the Open America’s Waters Act recently to end the Jones Act on the grounds that it hampers trade and leads to exorbitant prices of goods. While Rep. Darren Soto (D-Fla.), have called for only temporary waivers to transport natural gas and perhaps more oversight from the Department of Justice. Several Florida ports are home to large companies that receive significant benefits from these acts requirements.

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