One small piece of legislation could trim the East Coast’s fuel bill by $802 million a year, according to a new study, while cutting the region’s imports of gasoline by 36% and of jet fuel by 96%. That might sound like a large effect, but it’s only a fraction of the economic gains that could be had from repealing the protectionist Jones Act.
This 1920 law, formally called the Merchant Marine Act, says that ships carrying cargo between any U.S. points must be primarily built, owned and crewed by Americans. Although it’s billed as an America First policy, it raises the costs for coastal shipping of domestic products, which often gives imports an edge. The Jones Act makes news whenever a tanker full of Russian natural gas docks in Boston or Puerto Rico, but the same effect is hidden everywhere.
“Eliminating the Jones Act would have reduced average East Coast gasoline, jet fuel, and diesel prices by $0.63, $0.80, and $0.82 per barrel, respectively, during 2018-2019,” says a recent paper by two professors at the University of Chicago and Boston College, who published their findings in the National Bureau of Economic Research. In the law’s absence, fuel that’s exported from the Gulf Coast to other countries could instead be sent to the Eastern Seaboard in a way that’s profitable.