White House suspends the Jones Act for 60 days. Analysts see a gas price impact of 3 cents

The Jones Act requires that goods hauled between U.S. ports be moved on U.S.-flagged vessels. Passed in 1920, this law aims to protect the American shipping sector — but it’s also faced criticism over the years for slowing the delivery of goods, including critical aid during time of crisis.

On Wednesday, the White House said that it would suspend Jones Act requirements for 60 days, in a measure that arrives amid wider efforts to counter steep oil prices and cargo disruptions due to the war. The Jones Act is often blamed for making gas, in particular, more expensive. Still, some analysts and industry groups say this waiver will do little to ease consumers’ fuel bills today.

Here’s what we know.

What is the Jones Act?

The Jones Act’s official name is the Merchant Marine Act of 1920. Congress passed the law — sponsored by Sen. Wesley Jones of Washington state — in an effort to rebuild U.S. shipping after German U-boats decimated America’s merchant flee during World War I.

Among other things, the Jones Act mandates that ships carrying cargo and passengers between U.S. ports must be built in the United States and owned by Americans — effectively prohibiting foreign-flagged ships from this domestic trade. The vessels are also required to carry U.S. crews.

The law can be waived in the “interest of national defense,” the U.S. Maritime Administration notes, either through the Homeland Security or Defense Department.

The Jones Act also was intended to ensure that the U.S. had its own merchant fleet in case of war. It’s been strongly supported by some U.S. shipping companies, national security advocates and organized labor. But cutting out foreign competition has also driven up the cost of carrying cargo domestically.

U.S.-flagged ships are generally more expensive to both operate and build than foreign ones. And those costs are especially damaging to states and territories that are supplied by sea, such as Hawaii and Puerto Rico.

Why is Trump waiving Jones Act requirements now?

Oil prices have spiked and swung rapidly since the start of the Iran war. Nearly all tanker movement in the key Strait of Hormuzremains at a halt, which has led major oil producers across the Middle East to cut production. Commercial ships — which, beyond fuel, haul cargo from pharmaceuticals to computer chips — have also been stalled at sea or faced attacks themselves.

That’s pushing up prices for businesses and consumers worldwide. Brent crude, the international standard, was trading at nearly $109 a barrel on Wednesday, up from roughly $70 before the war began. And U.S. crude is now at about $98 a barrel. U.S. drivers have already seen prices at the pump jump dramatically — with the national average for regular gasoline topping $3.84 a gallon Wednesday, per AAA, up about 86 cents from before the war.

All of this has left countries scrambling for more supply and alternative shipping routes. The White House confirmed last week it was looking into suspending Jones Act requirements, which Trump called “restrictive.”

White House press secretary Karoline Leavitt said Wednesday that the Jones Act waiver would help “mitigate the short-term disruptions to the oil market” during the Iran war and would “allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports.”

Meanwhile, the American Maritime Partnership — a coalition that represents vessel owners and operators, unions, equipment yards and vendors — said in a statement that it was “deeply concerned” about the 60-day waiver “being abused and unnecessarily displacing American workers and American companies.”

The group, which has been a longtime supporter of the Jones Act, also reiterated that the action would do little to reduce gas prices for consumers.

How could suspending Jones Act requirements impact gas prices?

A number of factors contribute to prices at the pump. And many note that opening up domestic shipping routes isn’t a sweeping fix.

The Center for American Progress estimated last week that waiving the Jones Act would decrease East Coast gas prices by a modest 3 cents, but potentially raising costs on the Gulf Coast. And the move “would also sideline American shipbuilders and workers and allow the oil industry to continue to profit from high prices while reducing transport costs,” the research and policy think tank said Friday.

The U.S. is looking for additional ways to boost oil supply. Also on Wednesday, the Treasury Department eased sanctions to allow U.S. companies to do business with Venezuela’s state-owned oil and gas company. And the Trump administration has announced it will temporarily free up Russian oil from U.S. sanctions, too.

Last week, the International Energy Agency also pledged to release 400 million barrels of oil available from its member nations’ stockpiles, the largest volume of emergency oil pulled in the organization’s history. Trump, who previously downplayed the need to tap into reserve oil, confirmed that the U.S. would pull 172 million barrels from its Strategic Petroleum Reserve over 120 days as part of the IEA’s effort.

Still, analysts maintain this will be a short-term bridge. Refineries also buy crude oil in advance, and it takes time for new supply to trickle down to consumers. And, of course, it’s possible the pain of higher prices could increase further if the war drags on.

The U.S. is a net exporter of oil, but that doesn’t mean it’s immune to global spikes. Oil is a commodity traded globally. And most of what the U.S. produces is light, sweet crude, but refineries on the East and West coasts are primarily designed to process heavier, sour product. As a result, it also needs imports.

_______

AP Writers Seung Min Kim, Paul Wiseman and Collin Binkley in Washington contributed to this report.