Op-ed: Is the Jones Act Out of Time?

Historically high prices at the pump, geopolitical concerns and realignment of global energy security interests raise efficacy questions on 102-year-old law, according to partners at the Womble Bond Dickinson law firm.

From New England importing its LNG from Norway and Trinidad instead of the U.S. Gulf Coast to adding hundreds of millions of dollars to the cost of offshore wind projects, the cost of the Jones Act remains high particularly for oil and gas consumers and the offshore wind industry in the U.S., the Womble Bond Dickinson partners said. (Source: Andres Virviescas / Shutterstock.com)

[Editor's note: A version of this story appears in the August 2022 issue of Oil and Gas Investor magazine.]

In a recent response to President Biden’s call for increased oil refining capacity, Exxon Mobil Corp. responded by suggesting that, among other regulatory changes, waiving Jones Act vessel requirements could help relieve gas supply constraints and ultimately lower prices.

Exxon Mobil has a point. The Jones Act may have long outlived its usefulness and could be imposing costs on what U.S. consumers pay for energy that are far greater than its benefits.

Congress adopted the Jones Act, Section 27 of the Merchant Marine Act of 1920, after World War I to ensure that the U.S. would have a robust merchant marine to support military logistics in a future war. To do so, the act created a captive market for the U.S. merchant marine and shipbuilders, mandating that shipments between domestic ports use only vessels built, flagged, and registered in the United States that are crewed 75% by American sailors.

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