Is the Jones Act Waiver Working and is it Necessary? | What Does the US Need to Do in the Future?
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Quick Read
Summary
Takeaways
- ❖The Jones Act, specifically Section 27 (cabotage), requires vessels moving goods between US ports to be US-owned, built, flagged, and crewed.
- ❖The recent waiver extension allows foreign-flagged vessels to move oil, fuel, and fertilizer between US ports until mid-August.
- ❖Industry economists and maritime labor organizations argue the waiver will not reduce gasoline prices, as crude oil cost is the primary driver.
- ❖Data from the US Maritime Administration shows 93 Jones Act eligible ships, with 56 being tankers, as of January 2026.
- ❖Many Jones Act tankers are engaged in critical coastal trade (Alaska-West Coast, Gulf Coast-Florida, East Coast) and international support for US military operations.
- ❖The host disputes claims by Kevin Hassett that 8 million barrels of jet fuel were moved to the West Coast by waiver, showing actual data is significantly lower and for different commodities.
- ❖Examples like the M/V Cabo Deceo and M/V Pheasant illustrate foreign ships making short, domestic voyages (e.g., Galveston to Houston for ethanol) under the waiver, raising questions about necessity.
- ❖A significant number of US-flagged commercial ships go to foreign shipyards for repairs due to US yards being prioritized for government vessels, indicating a systemic repair capacity issue.
- ❖The host proposes a US government 'build and charter' program for new tankers, leasing them to commercial firms and eventually acquiring them for a ready reserve fleet, to boost US shipbuilding and ensure future capacity.
Insights
1Jones Act Definition and Waiver Mechanism
The Jones Act is part of the Merchant Marine Act of 1920, with Section 27 (cabotage) requiring vessels transporting goods between US ports to be US-owned, US-built, US-flagged, and US-crewed. Waivers can be issued by the Secretary of Defense for national defense interests, allowing foreign-flagged vessels to operate in this trade. The current waiver, extended for 90 days, permits foreign ships to move oil, fuel, and fertilizer between US ports.
The host defines the Jones Act and its cabotage requirements, citing 46 US Code 55102 and 501 for waiver provisions. He notes the waiver was requested by the Secretary of Defense due to 'operations that are happening in the Persian Gulf'.
2Limited Impact on Fuel Prices and Questionable Rationale
Despite claims that the waiver would lower fuel prices, industry economists and maritime labor organizations contend that the primary driver of gasoline prices is crude oil cost, not domestic shipping. Studies suggest any marginal savings from the waiver are unlikely to reach consumers. The host also questions the Secretary of Defense's rationale for the waiver, given previous statements that Persian Gulf issues do not impact the US.
Mike Scher's G Captain article and a letter from seven American maritime labor organizations state the waiver will not reduce gasoline prices. The host highlights the contradiction in the Secretary of Defense's justification for the waiver.
3Discrepancy in Reported Waiver Impact
Kevin Hassett claimed the waiver moved 8 million barrels of refined product, specifically jet fuel, to the West Coast to reduce price risk. However, the host's analysis of MARAD reports indicates only 1.347 million barrels were moved to the West Coast, and none of it was jet fuel, but rather gasoline, crude oil, and fuel oil.
Kevin Hassett's interview [] claiming 8 million barrels of jet fuel moved to the West Coast. The host directly refutes this by tallying MARAD's spreadsheet, showing 1.347 million barrels of other products moved.
4Questionable Waiver Usage Examples
The host provides specific examples of foreign-flagged vessels operating under the waiver in ways that seem to benefit oil companies more than address critical shortages. The M/V Cabo Deceo made multiple short voyages between California ports, waiting for waiver approval. The M/V Pheasant transported 'ungenerated ethanol' (pure alcohol) between Galveston and Houston, Texas, a distance easily covered by domestic tugs and barges, taking a week for the journey.
Detailed tracking of M/V Cabo Deceo's voyages between Martinez and Long Beach/LA []. Analysis of M/V Pheasant's movement of ethanol between Galveston and Houston [].
5Need for US Shipbuilding and Reserve Fleet
The average age of US tankers is around 18 years, necessitating a vessel replacement program. The host proposes a US government 'build and charter' program where the government builds tankers and leases them to commercial firms. After 20 years, the government would buy these ships for a ready reserve fleet, addressing both commercial needs and national security requirements, while revitalizing US shipbuilding and repair capacity.
The host states the average age of US tankers is 18 years [] and outlines his 'build and charter' program proposal, citing past successful programs and current US Navy shipbuilding capabilities.
Lessons
Revitalizing US Maritime Capacity: A Build and Charter Program
Initiate a US government 'build and charter' program to construct new medium-range and larger crude/product tankers in US shipyards (e.g., GD NASSCO, Philly Shipyard, Gulf Coast yards).
Lease these newly built US-flagged ships to commercial firms for long-term contracts, offsetting the high initial cost of US construction and ensuring dedicated domestic service.
At the end of the 20-year charter period, the US government should purchase these vessels to form a 'ready reserve fleet,' capable of activation for national security or emergency coastal trade needs.
Simultaneously, invest heavily in expanding and modernizing US shipbuilding and repair facilities, particularly those currently overwhelmed by government contracts, to reduce reliance on foreign yards for commercial vessel maintenance.
Re-evaluate specific Jones Act waivers for critical, hard-to-build vessel types like LNG carriers, allowing temporary foreign vessel use while prioritizing domestic construction in areas like tankers where US capabilities exist.
Quotes
"If you want to move a US cargo from a US port to another US port, you have to do it and your ship has to meet four criteria: Number one, you have to be US-owned. You have to be US built. You have to be US flagged. And you have to be US crude."
"Waving the Jones Act would do nothing to reduce gasoline prices. The primary driver of gasoline prices is the cost of crude oil, not domestic shipping costs."
"I am pretty sure what Valero is doing here is getting more gasoline blended so that they can ship it out to other places to the west coast on another waiver ship probably going out or to have gasoline that can be shipped out overseas to other places to do it. I am not sure if this is really meeting the confines..."
"I think what the Jones Act waivers tell us right now is not that we need to wave the Jones Act or get rid of the Jones Act, but that we need to do it. There's an interesting waiver that's in there, and that is a hall of of of fuel from the United States Gulf Coast to Puerto Rico."
Q&A
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