Jones Act

Paying Too Much for Natural Gas? Thank the Jones Act.

The federal law protecting the shipping industry from competition strikes again.

|

The northeastern U.S. is in the midst of a natural gas shortage that a terrible, cronyist federal law is making it harder to solve. It appeared in April that President Donald Trump was thinking of easing the problem, but the latest news suggests otherwise.

The issue here is the Jones Act, a 100-year-old protectionist law that requires cargo being transported between U.S. ports to be put on U.S.-built ships and crewed by Americans.

Natural gas being produced in Southern states could be transported by ship up to the north. There are not enough pipelines to deliver it by land. There also aren't enough Jones Act–compliant ships to comply with the law and deliver the gas domestically.

This has led to a particularly absurd outcome. Despite the fact that we produce our own natural gas, Massachusetts was left with little choice but to import it from Russia last year in order to meet demand. Bloomberg reports:

Oil industry leaders argue that the Jones Act restrictions undermine Trump's American "energy dominance" agenda, by encouraging imports of foreign oil and gas despite abundant supplies inside the U.S. Russian LNG was delivered to Massachusetts last year to help supply consumers in the Northeast U.S. And inland oil refiners argue requirements to use U.S.-flagged vessels boost the costs of obtaining raw crude, effectively subsidizing foreign competitors.

"The Jones Act is completely contrary to the president's energy agenda, in large measure because it encourages the importation of energy—diesel from Europe, LNG from Russia—rather than the use of energy made in America and developed and refined by American workers," said Mike McKenna, a Republican energy strategist. "If you're in favor of the Jones Act, you're in favor of damaging consumers and helping very specific interests line their pockets at consumers' expense."

Those "very specific interests" are the domestic shipping industry and the lawmakers who represent them. They continue to prop up the law despite the fact that it punishes American consumers, particularly those who live in areas that depend on ports to receive goods. Hawaii and Puerto Rico pay exorbitant amounts of money to ship in goods from the mainland. It costs more to ship something from the continental U.S. to Puerto Rico than to nearby Jamaica, thanks to the Jones Act.

As with tariffs, the Jones Act doesn't really accomplish the effects its supporters say it does. As the Cato Institute's Colin Grabow notes, the Jones Act's rules make it cost five times as much to build ships in the United States, so it's just not worth it. The end result of the law has actually been a decline in domestic shipping even as the economy grows.

Trump had reportedly been considering a 10-year waiver from the Jones Act for natural gas shipping. But according to the Washington Examiner, Trump has now told Louisiana's Republican senators that he won't follow through.

As you read the defense of the Jones Act by these two Louisiana lawmakers below, again, keep in mind that one of the results of this law was that Massachusetts had to import gas from Russia:

"We cannot let the United States become dependent on foreign countries to transport energy and critical products within the United States," [Sen.] Bill Cassidy said. "The Jones Act is essential to preserve our domestic shipping industry and protect our national and economic security."

Sen. John Kennedy, also of Louisiana, released a similar statement, saying "after talking to President Trump, I am confident that he realizes how important the Jones Act is to Louisiana's maritime industry and that no changes will be made."

Other lawmakers who recognize that the Jones Act is essentially forcing the entire country to subsidize the private shipping industry have been trying to get rid of the antiquated law, but it's got a tough road ahead.

NEXT: And Then There Were 22: Sen. Michael Bennet Enters the Presidential Race

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Well since trade wars are soooo easy to win lets put tarriffs on foreign energy. MAGA my ASS!

    1. Or we could tell the enviro cult ot go fuck itself and let the gas companies build pipelines. Just a thought.

      1. I don’t see the two as being mutually exclusive.

        1. Once you have the pipeline, you don’t need the ships. So, yes they are mutually exclusive.

          1. I suppose.

            1. The ships are just an expensive work around for the problem of their not being pipelines. If they could build the pipelines, they would not use the ships at all. The ships are much more expensive than using a pipeline.

              1. I think the point of the article was that ships are more expensive than they need to be because of the Jones Act.

                1. Not exactly. American crewed ships are much more expensive because of US shipping regulations. The Jones act highlights that issue, but it’s not the root cause.

          2. Now that I think about it, not necessarily. In some cases you might want both. It may be more efficient to transport by ship to a depot with a pipeline, rather than piping it the entire distance.

          3. Once you have the pipeline, you don’t need the ships.

            Transoceanic pipelines? Sounds expensive.

            1. Run them along side the transoceanic high speed rail.

            2. Between Canada and the Gulf states, we have no need of foreign supplies.

      2. BINGO! Give the man a cigar…

  2. No, blame the greens who do everything to stop pipelines. It makes no sense to import gas by ship when you can do it by pipeline. The only reason this is an issue is because the Greens own the New York State government and refuse to allow pipelines to be built.

    1. So you’re fine stealing people’s land without compensating them first? Because that helps the energy sector drive down the cost of the pipelines. Me I say let the energy sector decided which is the best way to distributing their products without the use of government force (or at least in the legitimate cases of Eminent Domain, they must compensate the landowner before doing any site work). But what do I know with my belief in the free market?

      1. o you’re fine stealing people’s land without compensating them first?

        No one’s land get’s stolen you idiot. Everyone gets paid and paid pretty well. On top of that, the pipeline is buried and doens’t interfere with the person’s use of it. It is basically free money.

        Me I say let the energy sector decided which is the best way to distributing their products without the use of government force (or at least in the legitimate cases of Eminent Domain, they must compensate the landowner before doing any site work). But what do I know with my belief in the free market?

        Good for you. The problem is you don’t know how ED works and you don’t seem to understand that it has nothing to do with why the pipelines are not being built. They are not being built because the green cult owns the New York state government.

        1. Man if only the IJ were a smart as you, John. Brilliant! But what do I expect obviously the government hires only the best and brightest attorney’s while those suckers at at IJ probably got their degrees from night school.

          IJ link to Erb Family Case

  3. >>>natural gas shortage

    if shortage is real, build pipelines.

    1. Bingo. You would think it would dawn on Shackford that the rest of the country doesn’ t have this problem for some strange reason.

      1. Maybe the rest of the country isn’t a fucking ball of ice?

        1. Like the Dakotas? Or Montana? They all have gas pipelines. New England doesn’t have them because they are being held hostage by the state of New York.

          1. They are producers. And it isn’t just New York. Maine is a conduit from Canada to the rest of the country. But the watermelons won’t allow it.

      2. Or density in the Northeast makes it hard without stealing land from property owners. But yeah Shackford should totally through away his principles on private ownership of land.

        1. The northeast is no more dense that parts of the midwest and they don’t have this problem. And for the lasty fucking time, no one has their land stolen even under ED. And most pipelines dont’ require ED.

          1. “We documented more than 200 eminent domain decisions where federal courts granted pipeline companies immediate possession of land, allowing these companies to take property now, put in their pipelines and pay later, even though Congress never granted these companies that authority,” said Institute for Justice Senior Attorney Robert McNamara

            So you’re ok if I come to your house, live in it for a year and finally get around to paying you whatever I feel like without you having a say in the matter?

            1. maybe the value takes longer to determine than the pipeline takes to begin to produce?

  4. High natural gas prices in the NE have nothing to do with ships.

    NY could be a significant producer but prohibits development, along with new pipelines. But, hey, no worries, de Bullshit declared that NYC will be fully green before we know it. I say to ensure that, producers should embargo NY.

    As for New England, they can always invade NY.

  5. You can be sure that if Orange Potatoman changes his mind again and pushes to get rid of the Jones act, those Trumpistas who argue here with the straight face their Fascist souls affords them that environmentalists are to blame and that we should just build more pipelines (a classic csse of missing the point, the Trumpista way) they would change their tune and all of a sudden agree with the pussy-grabber that we need to get rid of the Jones act.

    Trumpistas remind me of that Twilight Zone episode where all the adults were affraid of Billy Mumy and so agreed with everything he does, except that in this case the New York con-man has no other power than his white supremacist bromides.

  6. Build the wall around NY, purchase parts of Ontario and Quebec to build a land bridge between MI/PA and everything north of NY.

    1. Alternatively advocate for mainland NY to secede from Manhattan Island the same way Jefferson wants to leave CA.

  7. God forbid America would have real free trade.
    If America had actual free trade, a lot of rich folk wouldn’t be able to get their monthly government subsidy check.
    Then where would we be?

    1. But if sugar was cheaper we might eat more candy and get even fatter, and THEN where would we be.

  8. Wesley Livsey Jones was as fanatical a prohibitionist as the Texan who wrote the Prohibition Amendment. After protecting corrupt cops and dry agents in the Seattle area for years, the Senator pushed the Jones-Stalker Five and Ten law in 1929. This made beer a chain-gang felony with a fine in gold that would cost nearly $300,000 today. Coastwise shipping was an opportunity for foreign smugglers to save consumers money on excise and tariff gouging. No prohibitionist would sit still for THAT!

  9. Fact is that the progtards in Mass. have successfully blocked the gas pipelines, resulting in the current shortage. There are two interests at work here-the LNG terminal in Boston, which 10 years ago many of the same politicians who now oppose the pipeline wanted to get rid of because they considered it a terrorist target. LNG does not want to
    Lose its monopoly. The other interest is the heating oil delivery services-more than half the homes in NE still use oil heat because they have been very successful in blocking gas pipelines for years. The progtards are useful idiots for both of them.

  10. Is natural gas not allowed on trains or something??? I thought prog tards loved trains?!?!?!

  11. Adam Smith:

    The Act of Navigation very properly endeavours to give the sailors and shipping of Great Britain the monopoly of the trade of their own country, in some cases, by absolute prohibitions, and in others, by heavy burdens upon the shipping of foreign countries. The Act of Navigation is, perhaps, the wisest of all the commercial regulations of England.

Please to post comments

Comments are closed.