As diesel fuel prices rise across the country, the Department of Homeland Security is fielding requests for Jones Act waivers. While the government should approve these waivers, it seems likely that it will pursue a more permanent solution — to repeal the law altogether.
Otherwise known as the Merchant Marine Act of 1920, the Jones Act requires that any cargo carried between domestic ports must be transported on American-manufactured ships flying the American flag and manned by a mostly American crew. Initially aimed at protecting the U.S. shipping industry from foreign competition, the act artificially limits the supply of cargo ships, making it more costly to transport refined diesel fuel across the country. When energy shortages arise, governors often apply for waivers to get fuel delivered to their states from domestic refineries without having to wait for American ships to become available. Such waivers would not be necessary if the law were permanently revoked. Thankfully, there are strong indications that the Jones Act is facing a final repeal.
WHY RISK ‘TREASON’ CHARGES OVER THE JONES ACT?
In July, six state governors all sent a letter to the secretary of energy asking for a suspension of the Jones Act to help their states bring down energy costs. These governors all lead states that will be hit the hardest by the artificially high transportation costs imposed by the Jones Act. But they’re not the only ones questioning the law’s usefulness. Other politicians, along with economists, including some who generally favor government regulation, have grown more vocal in their opposition to this onerous regulation. The Jones Act is more unpopular than ever.
And for good reason. The Maritime Administration estimated that it costs about 2.7 times as much to ship goods on U.S.-flagged vessels. When importers are forced to have their goods carried at greater expense, those extra costs invariably trickle down to the consumers. One estimate found that the Jones Act costs the domestic energy industry about $298 million a year, contributing to higher energy costs for U.S. consumers.
Jones Act lobbyists have knives out to defend their pet policy. In 2020, the Marine Transportation System National Advisory Committee, an organization that includes cargo ship owners and builders, sent an email to a government agency recommending that “all past and present members of the Cato and Mercatus Institutes” be charged with treason. Their crime? Advocating the repeal of the Jones Act. Such extreme defensive measures show how vulnerable Jones Act supporters feel — clearly, proponents of the act sense that the political tide is turning against them.
It’s about time, too. The only reason it has lasted this long is that the benefits of the Jones Act are highly concentrated within small groups such as ship owners, ship manufacturers, crew members, and the unions that represent them. These groups have a huge incentive to lobby the government to keep it. And because they work closely with each other, they’re also easy to organize into groups such as the Marine Transportation System National Advisory Committee. Meanwhile, the marginal cost to everyone else has been negligible enough that it hasn’t been worth the time and effort it would take to lobby against the act — until now.
The Jones Act has become so onerous, irrational, and inefficient that its proponents are receiving significant backlash. Politicians from both sides of the aisle, including extreme progressives such as Rep. Alexandria Ocasio-Cortez (D-NY) and hardcore conservatives such as Sen. Mike Lee (R-UT), are uniting in their support of repealing the Jones Act.
With more mainstream voices coming out against the Jones Act, it’s no wonder lobbyists are on the defensive — but their desperate accusations of treason aren’t fooling anyone. This antiquated piece of protectionism is on its way out, and America will be much better for it.
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Tyler Curtis is a contributor at Young Voices. He received a bachelor’s degree in economics from Missouri S&T and works as a loan officer at a Missouri bank.
