A federal shipping law has increased the price of domestic oil in most of the United States, hitting consumers with an estimated $769 million in annual inflated costs for gasoline, according to a new study from the University of Chicago and Boston College.

The Jones Act, passed in 1920, requires ships sailing between two U.S. ports to be manufactured domestically, owned by a U.S. company and crewed by U.S. sailors. But experts say U.S. ships are far more expensive to build and operate than their counterparts in Asia, and are in short supply, leading oil and gas officials across the economy to opt to ship in product from out of the country rather than among U.S. ports.

For gasoline alone, the study found that repealing the rule would save consumers in the Southeast an average of 76 cents a barrel and consumers in the Northeast 63 cents a barrel. The price savings would be greater for jet and diesel fuels, with the cost in the Southeast for a barrel of jet fuel falling by $1.12 a barrel and by $1.12 per barrel of diesel fuel under a repeal scenario.

“Our study shows that the Jones Act hurts consumers, benefits producers, and leads to inefficiencies within the oil market,” said study co-author Ryan Kellogg, an EPIC scholar and professor at the Harris School of Public Policy at the University of Chicago. “Understanding who would win and who would lose if the Jones Act were repealed sheds some light on why this policy still exists.”

Conversely, repealing the rule would cost oil and gas producers an estimated $367 million annually in revenue due to lower prices that would occur along the East Coast. Researchers assessed costs from 2018 to 2019.

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