Some corporate welfare programs have clever excuses. The ethanol mandate and other green energy subsidies are supposedly good for the planet. The Export-Import Bank supposedly counters foreign subsidies. TARP was supposedly necessary to save the entire U.S. economy.
But the Jones Act doesn’t really have a very good excuse. Its defenders admit that it exists in order to deliver profits to U.S. shipping companies, profits that would be much smaller were the U.S. shippers forced to compete. The closest the companies come to a real justification for their subsidy is saying that they deserve to be subsidized because the national security reasons for which we need a U.S. shipping industry.
Corporate welfare tends to rankle Americans because we believe that one should have to earn one’s success, particularly in business. A secondary reason people dislike corporate welfare is that it rips off regular people. Sometimes, the victims are hard to spot. For instance, the victims of a government-guaranteed loan to John Deere’s overseas customers might be a businessman who never launched his business because he got passed over for a loan.
But the Jones Act’s victims are very obvious: people who pay extra for their goods or commodities because of the law.
The Jones Act requires that only U.S.-flagged ships can run from a U.S. port to another U.S. port. One very pertinent consequence: Natural gas traveling from Texas to hurricane-ravaged Puerto Rico must travel on a U.S.-flagged ship.
You can see the various ways that this drives up prices. Less competition means higher prices. Bottlenecks mean shortages.
And Puerto Rico, largely without power, right now needs diesel fuel, and it’s having trouble getting it. That’s why the Biden administration eventually caved and granted a waiver from the Jones Act.
The shipping companies opposed this waiver, asserting that Puerto Rico wasn’t lacking anything. But in their statement opposing the waiver, the companies made an interesting admission. The companies attacked British Petroleum for sneaking around the Jones Act in order to “sell its fuel at a premium to Puerto Ricans in need.”
Hmm. If there is a “premium” on diesel, that suggests there is unmet demand.
As the world’s prime Jones Act opponent, Scott Lincicome put it:
Can someone pls ask the Jones Act lobbyists why, if there is no fuel supply problem in Puerto Rico (and despite the PR Governor’s letter saying there is), BP could somehow sell its contraband diesel at a “premium” price? ? pic.twitter.com/nYw8T9AJKl
— Scott Lincicome (@scottlincicome) September 28, 2022
The limited waiver Biden granted is a good step. But he should go further.
DHS granted a narrow Jones Act waiver for the diesel ship waiting to dock in Puerto Rico: https://t.co/kmpowKhstY
Good, but more & longer JA relief is needed. Helping our fellow Americans shouldn’t take DAYS (& tons of political pressure), and they need relief in good times too pic.twitter.com/IDqM72ki77— Scott Lincicome (@scottlincicome) September 28, 2022
Congress should also act soon and send the Jones Act to the bottom of the sea.
