President Trump issued a waiver in March for the Merchant Marine Act of 1920 to help lower gasoline prices. This action allows non-domestic vessels to move goods between U.S. ports, bypassing traditional restrictions on ship ownership and construction.
The March Waiver and the Strategic Petroleum Reserve's 1983 Low
The Trump administration has utilized several economic levers to combat rising energy costs, including the issuance of a March waiver for the Jones Act. According to the report, this move is viewed as a bearish signal for oil prices because it increases the efficiency of transporting energy across the United States. At the time of the report, crude oil was trading down $0.62 at $78.70.
Beyond the waiver, the administration has also drawn oil from the Strategic Petroleum Reserve to stabilize the market. This reliance on emergency stockpiles has pushed the Strategic Petroleum Reserve to its lowest volume since 1983, highlighting the desperation to curb price spikes for American consuumers.
The Merchant Marine Act of 1920's Grip on US Ports
The Merchant Marine Act of 1920, commonly known as the Jones Act, mandates that all shipping between two U.S. ports must be performed by vessels that are American-built, American-owned, and American-crewed. Proponents of the law argue that these strict requirements are essential for maintaining a robust merchant marine and a capable navy, ensuring that the U.S. does not rely on foreign shipping during a national crisis.
However, critics argue that the law creates a closed market that primarily benefits a small group of stakeholders, including maritime unions, carriers, and domestic shipyards. as reported, these protectionist measures impose high, concentrated costs on the general public, who pay more for goods and fuel due to the lack of competition from more affordable foreign vessels.
The 2015 El Faro Tragedy and the Aging US Fleet
The high cost of constructing new ships in the United States has led to a stagnation in fleet modernization, resulting in an older average age for American-flagged vessels. A stark illustration of the risks associated with this aging infrastructure is the 2015 sinking of the El Faro, a disaster that resulted in the deaths of the entire crew.
A subsequent Coast Guard report on the El Faro sinking criticized the vessel's vulnerable design and its use of open lifeboats. The investigation also found that the crew failed to utilize the most current hurricane information, suggesting that the safety risks in the domestic fleet are not merely a result of ship age, but of systemic design and operational failures.
Colin Grabow's Challenge to the Domestic Fleet's Safety Record
The debate over safety is further complicated by an analysis from Colin Grabow of the Cato Institute. Grabow argues that claims made by pro-Jones Act groups—which suggest that foreign waiver vessels pose a unique safety risk—are misleading. According to the report, Grabow's analysis indicates that the domestic fleet actually suffers from a higher deficiency rate and a greater total number of deficiencies than the fleet of vessels operating under waivers.
Despite these findings, several critical details remain unverified. The report does not name the specific "pro-Jones Act groups" making the safety claims, nor does it provide the exact deficiency percentages cited by the Cato Institute. Furthermore, it remains unclear whether the March waiver is a temporary emergency measure or a signal of a broader shift in how the U.S. government intends to manage the Merchant Marine Act of 1920 in the long term.
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