New bill would repeal the Jones Act

Over at the National Interest, Paige Lambermont and I take a look at the Open America’s Waters Act from Sen. Mike Lee (R-UT) and Rep. Tom McClintock (R-CA). Their bill would repeal the Jones Act, a Buy American shipping law from 1920 that has destroyed America’s shipbuilding industry, snarled supply chains, and slowed disaster relief.

Fewer than 100 Jones Act-compliant ships exist because they cost at least triple what comparable foreign-made ships cost to build. As a result, Jones Act ships tend to be older and smaller than other ships. Shipping rates on Jones Act ships are similarly expensive and can’t compete outside the protected US market. The only business some US shipbuilders can get is from government contracts. 

That’s bad news for a shipping industry that could thrive if regulators allowed it to compete in a free market like other industries.

The Jones Act also has spillover effects on other industries. For example, it stifles the liquified natural gas (LNG) market and raises heating costs.

The Jones Act makes it nearly impossible to move US LNG to some parts of the country. There are no Jones Act-compliant LNG tankers in the US, and there are very few smaller vessels that qualify under the law. This is why New England, located just up the coast from an LNG terminal in Cove Point, Maryland, struggles to fuel its power plants during every winter.

That isn’t something tariffs can change. There isn’t enough pipeline capacity to provide sufficient gas on the coldest New England days, and it can’t receive LNG from another US port by tanker. As a result, on the coldest days, New England power plants often burn fuel oil, which is less efficient and more expensive to use. Some New Englanders use Canadian gas utilities, defeating the Jones Act’s Buy American mission

These problems, along with others such as the Jones Act’s role in raising the cost of living in Hawaii, Alaska, and US territories, as well as blocking disaster relief efforts during hurricane season, make it clear: it is time for the Jones Act to go. The Open America’s Waters Act deserves a vote.

Read the whole piece here.