Trump’s Misguided U-Turn on the Jones Act
(Bloomberg Opinion) -- President Trump has reportedly just rejected a waiver of the Jones Act — the law that requires the use of vessels built in the U.S. and owned and crewed by Americans to move cargo between U.S. ports — for shipments of liquefied natural gas. That’s bad news, and not just for U.S. producers of LNG.
Recently the White House was said to be leaning in favor of the waiver. This would have speeded the delivery of cheaper and cleaner energy from the U.S. mainland to Puerto Rico, whose decrepit power grid relies on old plants burning oil and coal. It would also have helped consumers in the Northeast tap into the U.S. natural-gas boom by providing a safe alternative to overloaded pipelines, and reduced their use of imported gas from suppliers such as Russia.
Best of all, it could have helped to sink the Jones Act altogether. Ships that comply with this law cost more to build and operate than foreign-flagged counterparts, raising the cost of almost all goods transported between U.S. ports. Those higher costs make it more attractive to buy oil, lumber, rock salt, wheat and other bulk goods from foreign suppliers. They keep more trucks on the road, clogging highways and spewing carbon. For good measure, the law also makes it harder to find specialized vessels for building wind turbines.
The Jones Act was meant to maintain a healthy merchant marine. But since 1960, the number of U.S.-flagged ships has plunged anyway. Hundreds of U.S. shipyards have been shuttered. Meanwhile the tonnage of cargo carried by coastal shipping — far more carbon-efficient than trucks or rail — has declined. The act is no longer working, if it ever did.
The shipping lobby defends it tenaciously and would like to extend it, requiring a mandated portion of U.S. energy exports to be carried on Jones Act ships. (Building Jones Act-qualified natural gas carriers could cost two or three times more than buying them from South Korea.) Energy producers are a formidable lobby, too — but in this case, apparently, not powerful enough. They should keep bending the president’s ear. If Trump changes his mind (again), it would help Americans benefit from cleaner energy, and could put a hole below the Jones Act’s waterline. That would be win-win.
Editorials are written by the Bloomberg Opinion editorial board.
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