The Trump administration is planning to temporarily ease a century-old maritime rule as it looks for ways to deal with rising oil and gasoline prices during the war in Iran. According to people familiar with the matter, officials are considering short-term waivers that would allow foreign ships to help transport fuel between US ports.
The 30-day waivers for the Jones Act would allow foreign tankers to help supply refiners on the East Coast with fuel from the Gulf Coast and other parts of the United States. The people speaking about the plan were not authorized to discuss the matter publicly.
What is the Jones Act?
The Jones Act is a key part of US maritime law that has been in place since 1920. It requires that cargo transported between US ports must be carried on ships that are built, owned and operated by Americans.
The law is actually Section 27 of the Merchant Marine Act of 1920 which was created to maintain and support the American Merchant Marine. It was introduced after World War I to strengthen the US shipping industry.
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Why was the law created?
US Senator Wesley Jones of Washington introduced the law to give his state a shipping monopoly to Alaska. Congress passed the legislation in order to support the American shipping industry in the aftermath of World War I.
The law is considered protectionist, meaning it protects domestic businesses. It focuses on maritime trade and cabotage which refers to shipping goods within the same country.
Under the rules, goods moved between US ports must travel on ships that are built in the United States and owned and operated by US citizens or permanent residents.
While the law protects the domestic shipping industry, it can also raise shipping costs. This especially affects non-continental US territories such as Hawaii, Alaska and Puerto Rico which depend heavily on imported goods.
Because only American-built and operated ships can transport goods between US ports which means fewer vessels are available which will make shipping more expensive.
Why the administration may issue waivers
The possible waiver comes as President Donald Trump looks at multiple options to address rising energy prices during the war in Iran.
On Wednesday, the administration announced it would release 172 million barrels from the Strategic Petroleum Reserve as part of a coordinated international effort to release 400 million barrels into the global market.
Allowing foreign tankers to temporarily transport fuel between US ports could help increase supply to East Coast refiners and ease pressure on prices.