A law that deserves to strike an iceberg
One century ago, Congress passed the protectionist Merchant Marine Act of 1920, commonly known as the Jones Act. This law states that any cargo transported between two US ports must be transported in ships built, owned and operated by US citizens or permanent residents. The law costs our economy more than $ 100 billion a year in lost growth and makes gasoline unnecessarily expensive. It is high time to put this bill in Davy Jones’ locker.
A huge problem with the law: today, large ships made in the United States cost four times as much as those made by foreign competitors.
The result of the Jones Act is significantly higher costs for consumers and businesses. The law has distorted shipping methods across North America. This particularly hurts Hawaii, Alaska, Puerto Rico, and Guam, which rely more on water-based products than the continental United States.
The most pronounced perversions of the law are found with regard to energy. For example, it would make sense for Puerto Rico to get its liquefied natural gas (LNG) from Georgia or Louisiana, but since there are no LNG carriers that meet the Jones Act requirements, the island must import gas from Russia. and other foreign sources.
The same distortion phenomenon also applies to the continental United States. It is cheaper for New England to get natural gas from Trinidad and Tobago or even Siberia than from the Gulf Coast.
We have the absurdity of east and west coast refineries finding it cheaper to import oil from overseas instead of transporting it from other parts of the United States. California can get gas more easily from Singapore than from the Gulf Coast. Refined petroleum products from Gulf Coast refineries are sold in Latin America rather than the United States because of the perversions of the law. But the Jones Act distortions go beyond energy. Have you ever wondered why so many retail products in Alaska and Hawaii cost so much more than in the Americas?
The Jones Law is a huge factor. Passage of the Jones Act would reduce the cost of shipping goods by water to the United States by 50%. An OECD study concluded that the torpedoing of this law could add up to $ 135 billion to US economic output.
An older cousin of the Jones Act is the Passenger Vessel Services Act of 1886, which similarly states that only ships of US manufacture, property, and personnel can carry passengers from one US port to another. Therefore, when you cruise to Alaska from San Francisco, the ship will first stop at a Canadian port before departing. A direct San Francisco-Alaska route is illegal. The United States has not built a large cruise ship since 1958. Both laws deserve to be sent to the bottom of the sea.