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Friday, November 2, 2012
Obama Administration Waives Jones Act For Hurricane Sandy
By Michael Hansen @ 10:37 PM :: 5219 Views :: Jones Act

by Michael Hansen, Hawaii Shippers Council 

The Secretary of the U.S. Department Homeland Security, Janet Napolitano, issued a Jones Act waiver this morning to allow foreign-flag clean products tankers carry refined petroleum products from domestic coastwise ports to the North East which is suffering from shortages of motor gasoline and diesel fuel due to Hurricane Sandy. The waiver expires on November 13.

The Jones Act Waiver was requested by New York Governor Andrew Cuomo (D) as two major oil refineries in the North East remain shutdown and the lines at gas stations in the affected areas including New York City reportedly stretched up to 2 miles.

Reuters reported “Benchmark New York Harbor gasoline futures dropped 5 cents, or 2 percent, on news of the waivers, which could allow shippers to divert cargoes that are en route to Europe or Latin America to the depleted Northeast market.”

The primary Jones Act lobby organization – The American Maritime Partnership (AMP), formerly the Maritime Cabotage Task Force – issued an open letter to President Barak Obama stating that they will not oppose temporary waivers in this instance. The AMP is normally a fierce opponent of Jones Act waivers that are typically issued for the carriage of crude oil from the U.S. Strategic Petroleum Reserve (SPR) on the U.S. Gulf Coast to refineries in the North East. Presumably in this instance the AMP decided it was politically best not to be seen opposing the waiver as so many people are suffering.

The need for a Jones Act waiver and the quick relief it will provide to the hard-hit people in the North East in the wake of Hurricane Sandy clearly demonstrates the drawbacks of the Jones Act as public policy and how it’s complete protection of the domestic U.S. maritime industry inhibits commerce and harms the consumer.

The shortages in the North East remind us that the situation of the noncontiguous jurisdictions – Alaska, Guam, Hawaii and Puerto Rico – is far more dependent on the Jones Act shipping industry. Their geographic separation from the contiguous U.S. that precludes the use of other forms of transportation – railroad, road truck, pipeline and inland barge – that are readily available to the 48 contiguous states.

We can begin to relive the precarious dependence of the noncontiguous jurisdictions on the Jones Act industry by exempting the noncontiguous trades from the U.S. build requirement of the Jones Act for large self propelled ships as the Hawaii Shippers’ Council has proposed.

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