President Donald Trump issued a 60-day waiver on Wednesday for a century-old shipping law in an effort to lower gasoline and oil costs. The move targets the Jones Act, which regulates how goods are transported between U.S. ports.
The waiver was issued as the ongoing war with Iran continues to disrupt global energy markets. The conflict has led to the closure of the Strait of Hormuz, causing oil prices to spike and driving the average price for a gallon of regular gasoline in Washington above $5.
The Jones Act is officially known as the Merchant Marine Act of 1920. The legislation was sponsored by Sen. Wesley Jones of Washington and was originally designed to protect the American shipbuilding industry. It requires that all goods transported by water between U.S. ports be carried on ships that are built, owned, and flagged in the United States. While the act was intended to support domestic maritime interests, it is frequently cited by critics as a factor that increases fuel prices.
Policy experts suggest that the waiver may result in only minor changes for consumers. Courtney Federico serves as the Associate Director of Climate Policy for the Center for American Progress. Federico noted that research from the National Bureau of Economic Research indicates the shift in costs per gallon would be small.
“The National Bureau of Economic Research estimates this could reduce the cost of gasoline by 63 cents per barrel,” Federico said. “Which is maybe only three cents per gallon. That is only on the East Coast of the U.S., a negligible impact if any at all.”
Industry analysts have also questioned the impact the waiver will have on fuel costs in different regions of the country. Patrick DeHaan is a representative for GasBuddy. DeHaan stated that while the waiver will allow fuel to move more easily through the United States, the benefits may not reach the West Coast.
“It will simplify logistics. It will allow gas to flow through the U.S. more freely from gold coast refineries up to the northeast,” DeHaan said. “It really won’t do a lot on the West Coast. It may ultimately have a non-visible impact, about five to ten cents a gallon, but with prices going up... It’s not going to cause prices to go down, but it will cause them to go up at a slower pace.”
The administration’s decision comes during a period of significant volatility in the energy market.
The ongoing war with Iran has resulted in the closure of the Strait of Hormuz. This closure has restricted global supply and caused oil prices to spike. Regional fuel costs have reflected these global tensions, with Washington state’s average price for regular gasoline rising 34 cents over the past week. Today’s average is nearly one dollar higher than prices recorded both one month and one year ago.
The waiver is scheduled to remain in effect for 60 days.
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