Trump May Waive the Jones Act for Oil Shipments. Let's Repeal It Instead.
The century-old law makes energy more expensive even when there isn't a war raging in the Middle East.
One of the spillover effects of the recently launched war in Iran is higher energy costs: The prices of oil and gas have risen considerably since President Donald Trump piggybacked on Israel's bombing campaign.
Now, Trump is reportedly considering a workaround to address the problem in the short term, by suspending enforcement of a protectionist law. That's a good start, but we should go one step further and repeal it altogether.
"The war has effectively closed the Strait of Hormuz, a critical choke point between the Persian Gulf and the Indian Ocean," Reason's Eric Boehm wrote Monday. "A large portion of the world's oil supply flows through it."
"The price of Brent crude, the international benchmark, briefly surged to $119.50 per barrel on Monday—its highest level since the summer after Russia invaded Ukraine in 2022," the Associated Press reported. While it later fell back into the double digits, there is every indication that oil prices will continue to be a major concern.
On Monday, Reuters reported that Trump was considering a series of options to address the crisis, including "intervening in oil futures markets, waiving some federal taxes and lifting requirements under the Jones Act."
Under the Merchant Marine Act of 1920, more commonly called the Jones Act, cargo shipped between two U.S. ports must be carried by ships that were built in America and are primarily owned and staffed by Americans.
As a result, oil pumped in Alaska can only be transported to the U.S. mainland by a small subset of available vessels, making it much more difficult—and expensive—to do so. But it goes even further than that: "[A] French cargo ship can dock in Boston, but it can't continue on to Savannah," writes Andrew Wilford of the National Taxpayers Union Foundation. It would have to either stop at a non-U.S. port first, or simply skip Savannah altogether. As a result, Americans pay more for certain energy products like natural gas, even when it's produced here.
"The logic behind the law was that restrictions on foreign competition would, among other things, encourage the development of a strong U.S. shipbuilding sector," Colin Grabow of the Cato Institute wrote in 2019. But "rather than prospering, U.S. shipyards have been in a decline for decades, and there are only a mere handful that build oceangoing commercial ships. That may seem a headscratcher to some given the Jones Act's U.S.-build requirement, but it makes more sense when one considers that these ships cost up to five times more than equivalent vessels built in foreign shipyards."
"The U.S. only had 92 Jones Act-compliant ships in 2024," writes Caleb Petitt of the Independent Institute. "However, there were 185 U.S.-flagged ships that year. The other 93 are foreign-built ships that have been flagged in the United States." Even though the ships are registered in the U.S., they can't carry cargo between American ports since they weren't also built here.
"Oil tankers make up 55 of the 92 ships in the Jones Act fleet," adds the Grassroot Institute of Hawaii. "In 2014, the Hawaii Refinery Task Force concluded that the Jones Act was a major reason Hawaii is almost wholly dependent on foreign oil, since the cost of importing oil from the U.S. mainland aboard Jones Act tankers…is more expensive."
But presidents can waive the law's requirements in times of crisis. Trump would not be the first president to do so: After Hurricane Fiona knocked out power across Puerto Rico in 2022, then-President Joe Biden granted a waiver allowing a tanker carrying 300,000 gallons of diesel fuel to dock.
Trump himself also waived the Jones Act for Puerto Rico in 2017, after Hurricane Maria hit the island—though the waiver only lasted for 10 days.
In fact, Puerto Rico provides a perfect example of why the Jones Act is counterproductive even in peacetime. The law makes Puerto Rico pay more for liquefied natural gas (LNG) than its neighbor, the Dominican Republic. There currently exists no LNG tanker compliant with the Jones Act, so even though the Dominican Republic can buy LNG from the U.S., Puerto Rico—a U.S. territory—must buy its LNG from foreign sources, including Russia.
"I introduced the Open America's Waters Act last year to repeal the Jones Act, which raises the cost of energy and goods on consumers," Sen. Mike Lee (R–Utah) posted on X in response to the news that Trump was considering a waiver. "Chucking this outdated policy would be a great step to alleviate fuel prices for American families."
In fact, Lee has advocated repealing the Jones Act for several years. The current oil shock provides the perfect excuse to do so.
"The decrepit Jones Act fleet makes it cost prohibitive to move products from Gulf Coast refineries to the Northeast or the West Coast," The Washington Post editorial board wrote Monday. "The Trump administration is reportedly considering waiving the law, and there is already legislation introduced in Congress to repeal it. That's a great idea regardless of anything happening with Iran."
