Supply Chain Woes Bring Out Jones Act Haters

The supply chain has been front and center in the news lately. As if on cue, the enemies of the Jones Act are again trotting out their discredited arguments.

This time the attacker was Steve Forbes, CEO and editor of Forbes magazine, who wrote an anti-Jones Act editorial earlier in the month. He claims, without evidence, “The law is costing our economy more than $100 billion a year in lost growth and is making gasoline unnecessarily expensive.”

Wrong. The Jones Act is a perennial target of the oil industry, but rising gas prices have nothing to do with the Jones Act, and much more to do with lower global production, supply disruptions in the U.S. unrelated to the Jones Act and even climate policy signaling.

Forbes brings up Puerto Rico, another perpetual Jones Act opponent, but a study by the American Maritime Partnership concluded that two-thirds of Puerto Rican imports already arrive on foreign ships, and the cabotage rules of the Jones Act have no impact on retail prices or the cost of living in Puerto Rico. 

Forbes writes of the “absurdity” of customers in the Northeast and West Coast finding it cheaper to import foreign oil and gas on foreign vessels than transporting it from the Gulf or other U.S. sources. “It’s cheaper for New England to get natural gas from Trinidad and Tobago or even Siberia than it is from the Gulf Coast.” But that has much more to do with anti-pipeline moves by the New England states than anything to do with the Jones Act. In January, the New York Times noted, “Now … pipeline projects … are being challenged as never before as protests spread, economics shift, environmentalists mount increasingly sophisticated legal attacks and more states seek to reduce their use of fossil fuels to address climate change.” 

According to the Energy Information Administration, “In the Northeast … additional supplies of heating oil might come from other parts of the world such as the Gulf Coast or Europe. Transporting heating oil from these sources to the Northeast is expensive, and delivery can take several weeks. During that time, storage inventories may drop further, buyers’ anxiety about available short-term supply may rise, and prices may increase—sometimes sharply—until new supply arrives.” 

Getting rid of the Jones Act would make no difference to these conditions. 

In fact, the reasons for keeping it have increased now that the supply chain disruptions have brought home the uncertainties of the “just-in-time” economy and the consequences of our dependence on foreign-owned shipping lines. 

Finally, like most non-industry critics of the Jones Act, Forbes ignores the inland waterways and the implications of having foreign-flag vessels operating on them.  That’s something no one wants.