Trump administration considers waiving Jones Act to ease fuel prices

The administration of Donald Trump is considering temporarily waiving a century-old maritime law that requires US-flagged vessels to transport goods between American ports, as officials look for ways to counter rising oil and gasoline prices, according to people familiar with the discussions who spoke to Bloomberg.

The proposed move would suspend provisions of the Jones Act for 30 days, though the plan is still being developed. If implemented, the exemption would apply broadly to ships carrying oil, gasoline, diesel, liquefied natural gas and fertiliser between US ports, the people said.

The waiver would allow generally cheaper foreign tankers to move those commodities domestically. That could include shipments of crude oil from the Gulf Coast to refineries on the US East Coast, as well as deliveries of fuel from the Gulf region to more densely populated areas.

“In the interest of national defence, the White House is considering waiving the Jones Act for a limited period of time to ensure vital energy products and agricultural necessities are flowing freely to US ports,” said Karoline Leavitt. “This action has not been finalised.”

The plan comes as the administration explores multiple options to curb a sharp rise in crude and gasoline prices amid the war involving Iran.

On Wednesday, the US government announced it would release 172 million barrels of crude oil from the Strategic Petroleum Reserve. In parallel, other countries are coordinating with Washington to release a combined 400 million barrels from their own stockpiles.

Following reports of the possible Jones Act waiver, US gasoline futures pared earlier gains.

According to a 2022 estimate by JPMorgan Chase & Co., suspending the law could reduce gasoline prices for motorists on the US East Coast by around 10 cents per gallon.

David Goldwyn, a former energy envoy during the administration of Barack Obama and president of the consulting firm Goldwyn Global Strategies, said the measure could improve fuel flows to the northeastern United States.

“It absolutely facilitates the free flow of gasoline, which otherwise would have to come from Europe or other destinations to reach the Northeast,” Goldwyn said. “There are very few US tankers that are available so the Northeast continues to import whatever gasoline they can’t get from pipeline.”

Most US refineries are located along the Gulf Coast, while there is only one major pipeline connecting that refining hub with the Northeast, the country’s most densely populated region.

However, some analysts say the impact of a temporary waiver would likely be modest. Colin Grabow, associate director at the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, said the law’s effect on gasoline prices is limited.

“The Jones Act is probably responsible for a few cents per gallon — pennies per gallon, not dimes per gallon,” Grabow said. “It could be helpful, but the effects could get swamped by broader movements in the market.”

Waiving the law can also be politically sensitive. The Jones Act is strongly supported by some of the country’s largest shipbuilders and vessel operators, as well as their allies in the US Congress.

A White House official said Thursday that the administration believes the temporary waiver would not undermine the US shipbuilding industry.

The United States has previously issued temporary exemptions from the law during emergencies. The most recent case occurred in October 2022, when the government waived the Jones Act to allow a tanker to deliver supplies to Puerto Rico following Hurricane Fiona.

The administration of Joe Biden also temporarily granted an exemption in 2021 for Valero Energy Corp. after a cyberattack disrupted a major fuel pipeline supplying the US East Coast.

By Tamilla Hasanova