The Jones Act Waivers Aren’t Achieving Stated Purpose But Hinder Long Term Maritime Goals​

By John D. McCown

On March 17, 2026 the Department of Homeland Security issued a waiver allowing foreign flag vessels to move various energy related commodities between U.S. ports.  The Jones Act reserves the movement of cargo between U.S. ports to vessels built in the U.S. and owned and crewed by U.S. citizens.  The 60-day waiver was initially scheduled to expire on May 17, 2026.  While the list of products covered by the waiver totaled 659 commodities, the stated focus was primarily related to gasoline supply and prices.  Administration spokesperson Karoline Leavitt said the purpose of the 60-day waiver was to “mitigate the short-term disruptions to the oil market” resulting from the U.S. military action in Iran.  A review of all of the facts shows that to date the Jones Act waivers have had no perceptible effect on gasoline prices and that the overall Jones Act impact on costs is inconsequential compared to its clear benefits.

The waiver announcement outlined a process including information related to the cargo and its load and destination ports.  This information is available in a worksheet file on the website of the Maritime Administration.  As of April 28, 2026, there were 19 separate situations with information on the cargo and its movements.  Nine involved full tanker loads of fuel or crude oil moving between states.  Three situations involving intra-California full tanker movements, smaller non full tanker movements and situations not involving fuel or oil seemed irrelevant as they were not consistent with the stated purpose.

Of the relevant 9 movements, four involved gasoline shipments going to California with three from Washington and one from Texas.  The remaining five full tanker loads were gasoline from Washington to Oregon, Louisiana to Florida, Louisiana to Puerto Rico, New Jersey to South Carolina along with crude oil from Texas to Pennsylvania.  The four inbound loads to California totaled 1,072,000 barrels and the five other loads totaled 1,415,000 barrels for 2,487,000 barrels in total.  With a barrel equivalent to 42 gallons, the 9 movements involved 104.5 million gallons.

There has been no disclosure of actual pricing related to these foreign flag movements.  One credible actual comparison related to a 2021 waiver during the Colonial pipeline shutdown where my article detailed a Gulf Coast to East Coast voyage difference of no more than $280,000, the equivalent of 2.38 cents per gallon.  That route is one of the two primary traditional ones for Jones Act tankers, with the other being Gulf Coast to Florida.  Both traditional routes are driven by insufficient pipeline capacity as the mainland’s extensive pipeline network is the most efficient way to move gasoline and refined products.

I’ve written many articles over the years focused on attempting to inoculate the misinformation put out by the Cato Institute on the Jones Act.  Cato’s refrain is exaggerating the building cost difference in the U.S. and constantly referring to it in the hope some will believe the rates Jones Act vessels get are 4-5 times foreign flag vessels.  An example of Cato’s hyperbole is its 2022 claim that the Jones Act added $4.3 billion annually to East Coast gasoline costs.  In fact, my detailed analysis proved that the incremental cost was no more than $85 million.  Cato overstated the cost per gallon by four times and ignored the fact that only 7.3% moved by vessel.  Those geometric errors translated into a 50-fold misstatement.  That tells you all you need to know about Cato Institute as a finder of fact related to the Jones Act.

In terms of achieving the stated goal, actual gasoline prices as reported by the U.S. Energy Information Administration show no such signs.  The table below shows the average weekly price per gallon in February before the Iran situation and average prices for the weeks ending 3/16/26 and 4/27/26.  The initial Iran related spike is shown in 3/16/26 and the cumulative spike is shown in 4/27/26.  Included are actual prices nationwide, by PADD region and by selected states receiving waiver related shipments.

California, the state receiving the most inbound shipments using waivers, actually had the largest price increase.  California is unique and its typical $1.50 per gallon higher gasoline prices have nothing to do with the Jones Act.  This table along with the fuel flows represented by the waivers are worth close studying for the myths they bust about the Jones Act.  Florida, by far the largest inbound destination for Jones Act tankers, has gasoline prices lower than the national average and that difference has more than doubled.  Despite perennial claims that without the Jones Act the typical 50 cent per gallon difference between PADD 1B and PADD 3 would sharply narrow as traders engaged in arbitrage, no gasoline and only one load of crude moved.  In fact, the only movement of gasoline with a waiver was in the opposite direction, going from New Jersey to South Carolina.  The total of 104.5 million gallons so far moving under waivers was just 0.6586% of total U.S. gasoline consumption over that same period.  Using the 2.38 cents per gallon cost differential, that works out to 0.0157 cents per gallon nationwide.  Based on the latest price, that pegs the actual savings from the Jones Act waivers to date at 0.0037% of the cost of gasoline.  Even when the equivalent of 6.5% of U.S. gasoline that moves on Jones Act tankers is included, the total cost differential is 0.1704 cents per gallon.  That is equal to 0.0400% of the latest gasoline price nationwide.  Taken together, all these facts show that to date the Jones Act waivers have had no perceptible effect on gasoline prices and that the overall Jones Act impact is inconsequential.

On April 24, 2026 the Department of Homeland Security announced that it was extending the Jones Act waiver another 90 days to a new expiration date of August 16, 2026.  The waiver expiration relates to when the cargo must be loaded and not to when it must be discharged.  Given the facts outlined above, it is puzzling why the waiver was extended.  There is no reason to believe the impact for the balance of the extension will be any different than it has been to date.  The broadness of the waiver, both the initial and the extension, under 46 USC Section 501(a) is also surprising.  Section 501(b) is a much better and more targeted way to carry out the “immediate defense” justifications of the current waiver without applying to the whole country.

I surmise that Cato Institute and other critics of the Jones Act have been successful in spreading more misinformation than the facts allow.  Some may philosophically disagree with the Jones Act if they believe it results in any cost difference.  While I disagree with such views on the basis of the tangible national security and stability benefits of the Jones Act, I can appreciate that view.  What I don’t appreciate is the disregard for the real facts and the hyperbolic and unsupportable claims constantly made by the Jones Act critics.  Instead of a solid foundation on the actual direct economic costs, the critics continue to exaggerate figures and make selective out of context comparisons that present a distorted picture.

While it appears to act like a traditional think tank on this matter, from my years of experience with Cato Institute’s Jones Act claims I’ve concluded its efforts are being directly underwritten by three foreign corporations with an interest in liquified natural gas or LNG.  It’s a clever artifice to make lobbying look more like research but the factually unsupported claims should be scrutinized and rejected.  Boston and San Juan are the only two places in the U.S. that import LNG.  That results from insufficient or non-existent pipelines which are by far the most cost-efficient way to move natural gas.

National Grid is a large UK-based utility conglomerate with major operations in the northeast U.S.  They are concentrated on Massachusetts where its distribution network provides electricity and natural gas to four million customers.  New Fortress Energy is a public company controlled by Fortress Group, a private equity fund, which itself is controlled by Softbank, a large Japanese holding company with investments in technology, energy and finance.  In 2019 it entered a twenty-year contract to provide LNG to PREPA, the Puerto Rico electric utility company.  It is the exclusive provider of LNG to Puerto Rico, and this contract is a meaningful part of its business.  As LNG involves a low value commodity moving on the most expensive type of ship, the distance from origin to destination is a key driver.  Almost all of the LNG going to Boston and San Juan comes from Trinidad, the closest major source to both points.  Because of these facts, those points represent a captured market for Trinidad and that doesn’t result in the best pricing.  Without the Jones Act, sourcing LNG from the U.S. Gulf Coast would inject competition.  However, because Trinidad is still closer to both Boston and especially San Juan, the likely ultimate effect is LNG would still come from Trinidad but at a lower price.  As New Fortress Energy’s contract with PREPA prices LNG based on Henry Hub natural gas futures, any benefit from less costs resulting from a Jones Act exception resides with it.  When you “follow the money,” it is understandable why foreign entities are funding Cato Institute’s lobbying campaign.

The focus on LNG was highlighted by the nearly successful attempt in the summer of 2020 to implement a ten-year Jones Act waiver just for LNG shipments.  Despite that focus, it is worth underscoring that none of the waivers to date have involved a shipment of LNG despite it being listed as one of the 659 commodities eligible for such waivers.  Perhaps that fact played a role in the recent extension as critics pressured for more time to prove their LNG thesis.  When the critics turn their attention to non-tanker segments in the Jones Act, their claims become even more unsupported by the facts.  In container shipping, the large majority of carrier costs have nothing to do with the ship and are unaffected by the Jones Act.  Going through the real numbers, the total cost difference in an objective comparison for container shipping would be in the 15–20% range.  Using those facts, my 2021 article systematically dismantled a report saying the Jones Act cost Hawaii consumers $1.2 billion per year and pegged the real cost at $136 million.

Just as the critics ignore the real numbers and promote exaggerated and unsupportable claims to further their own economic interests, they ignore the clear national security benefits of the Jones Act.  Jones Act vessels comprise most of our merchant marine and provide crucial seagoing billets for maritime academy graduates.  These trained seafarers are the key element in our merchant marine.  Ending a significant portion of those jobs results in training issues not readily reactivable.  There is also an extensive web of suppliers and professionals linked to the Jones Act that also provide critical products and services for naval shipbuilding.  Harming them compromises that national security capability.

By focusing exclusively on domestic markets, Jones Act vessels also provide consistent and reliable capacity untethered to the vagaries of international markets.  The stable service they provide with assured capacity is in and of itself a form of economic security for the markets served by those vessels.  In the container shipping segment, Hawaii, Alaska and Puerto Rico all rely on the economic lifeline that imports much of what is consumed and exports much of what is produced.  If the Jones Act went away, all those routes would be dominated by existing foreign flag vessel services that would make outbound stop off calls with existing deployments.  The direct returns in the existing Jones Act shuttle services would disappear.  Those communities would see a geometric increase in the rates and time involved for shipping exports, the ones most linked with jobs, back to the mainland and would compete with headhaul lane loads.  It could even get worse if events in international markets lead to deployment changes that would have carriers skipping port calls as they did during the pandemic.  The absence of consistent and reliable service given the key military bases in Alaska and Hawaii could immediately have adverse national security concerns.

My January 2023 CMS article highlighted the need to grow our merchant marine and the broader awareness of this critical need has only grown since then.  This administration is to be applauded for many initiatives supportive of building our merchant marine, our shipbuilding capability and the broader industrial base in which it is linked.  But doing anything to weaken the Jones Act moves opposite to the direction we should be moving in.

This Jones Act waiver will now be the longest waiver in the 106-year history of a law that has served our nation well.  While it can’t end soon enough, it unfortunately can still have a corrosive effect of initiatives that we should be doing everything to support.  I’m aware of many initiatives at various stages resulting from the broad tailwinds that exist today.  From my own experience, I know that often at the eleventh-hour key investors, lenders and suppliers may ask “will the Jones Act stay in place?”  These waivers put a dent in what should be the resolute answer that it enjoys broad bipartisan support.  What they didn’t do is put a dent in the $1.218 increase to date in gasoline prices, as the 0.0157 cents per gallon benefit is approximately 1/8000^th of the increase.  By my math, that is meaningless.  A meaningless short-term benefit at the expense of a corrosive catalyst that can hinder long-term maritime goals is bad policy.

 

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The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.