Sooner or later, Americans will get fed up with the Jones Act
The maritime industry may not like being compared to the Sicilian Mafia, but there is an element of truth to this analogy when considering the quick about-face President Trump made recently on the 99-year-old protectionist law known as the Jones Act.
After signaling earlier this month that he may waive the act’s requirement that only American-made ships be used to transport liquefied natural gas between American ports, Trump later cried “uncle” and reversed course. Republican senators in the shipbuilding states of Mississippi and Louisiana complained — they don’t want foreign-made ships taking domestic natural gas from Texas and Maryland to Massachusetts and Puerto Rico.
That’s a shame, since there are absolutely zero Jones Act-qualified liquefied natural gas tankers in service today, and none have been built in the United States in almost 40 years. Both New England and Puerto Rico struggle with some of the highest natural gas and electricity prices in the country, and could get some relief from a Jones Act waiver. But thanks to these senators’ objections, Boston and San Juan will just have to import higher-cost natural gas from Trinidad and Russia — yes, that Russia.
After unscrupulous crime lords take their profits for years, business owners simply close up shop. That’s precisely what has happened with the U.S. shipping industry over the course of the 20th century. The Jones Act is simply the legislative equivalent of a periodic Mob shakedown that slowly saps the life out of business owners.
The Jones Act was originally passed in 1920 as a way to use excess U.S. shipping capacity after the end of World War I. At the time and shortly thereafter, thousands of American-made ships plied the world’s oceans. In 1960, there were more than 2,900 large cargo-carrying ships in the U.S. commercial fleet. By 2018, however, the number had fallen all the way to 176. The number of ships that meet the Jones Act’s requirements for operating between American ports has also shrunk, from 193 in 2000 to just 99 in 2018 — and of course, there are zero liquefied natural gas carriers. No U.S. shipyard has built a liquefied natural gas carrier since 1980, nor will it in the future, since South Korea and Japan can build them for less than half the cost.
Free trade in other transportation industries means that Americans are as likely to drive a Toyota or a BMW as a Ford or a Chevy. Imagine how unsafe and poorly constructed, not to mention expensive, our cars would become if there had been no competition from European or Asian carmakers since the middle of the 20th century.
Unfortunately, the U.S. maritime industry (which consists mostly of a few dozen privately owned corporations) is a vested interest with deep pockets. This means that otherwise smart lawmakers who should know better get to play the role of dumb “capos” simply taking orders from their mob superiors.
“It is bad policy and it would be bad politics,” said Sen. John Kennedy, R-La., of the waiver in an interview before a meeting with Trump. “We cannot let the United States become dependent on foreign countries to transport energy and critical products within the United States,” added Sen. Bill Cassidy, R-La., in a press release after that same meeting.
As a lawyer and a doctor, respectively, both men have intelligence to spare. But do foreign-made, 18-wheel tractor-trailers humming along the highway really threaten national security because they were made in Germany or Japan?
The maritime industry’s lack of competitiveness has left America and domestic industry workers vulnerable to a massive catch-22. Today, few arguments can be made to shipyard workers to convince them that their industry needs to be opened up to more competition with the rest of the world. Yes, they would love to see the United States have a much larger shipbuilding capacity and be more competitive with foreign shipbuilders. But doing so would effectively require killing the industry (and jobs) in order to save it.
Hence the irony of Trump’s waiver about-face. Because no American-built liquefied natural gas carriers have operated anywhere in the world for decades, the waiver would not have cost the domestic maritime industry a single job. Yet because the industry has become so uncompetitive, it must now block all possible avenues for opening up in order to survive.
This is the case even though a Jones Act waiver would have no negative impact on any portion of the U.S. economy, large or small. For Puerto Rican and New England energy consumers, Texan and Pennsylvanian exporters of cheaper natural gas, and the domestic economy as a whole, only benefits would accrue. But that would also mean no more Jones Act shakedowns.
Such is life under the maritime mafiosi.
