White Housetemporarily suspends Jones Act for 60 days; analysts forecast only a 3-cent impact on gas prices

(SeaPRwire) –   As the ongoing conflict involving the U.S., Israel, and Iran continues to disrupt global energy markets and supply chains, the Trump administration has announced a temporary waiver of maritime shipping rules under the century-old Jones Act.

The Jones Act mandates that cargo transported between U.S. ports must be carried on ships that are U.S.-flagged. Enacted in 1920, the law is designed to support the domestic shipping industry but has long been criticized for delaying deliveries, including essential aid in emergencies.

This Wednesday, the White House stated it would suspend Jones Act provisions for 60 days, a step taken as part of broader initiatives to combat high oil prices and shipping interruptions caused by the war. The act is frequently cited for increasing fuel costs, especially gasoline. However, several analysts and industry organizations contend the waiver will have minimal immediate effect on lowering consumer fuel expenses.

Here’s what we know.

What is the Jones Act?

Formally called the Merchant Marine Act of 1920, the Jones Act was passed by Congress—introduced by Sen. Wesley Jones of Washington—to revitalize the U.S. merchant marine after World War I, during which German submarines heavily damaged the American fleet.

The law stipulates that vessels moving cargo and passengers between U.S. ports must be American-built, American-owned, and crewed by U.S. citizens, effectively barring foreign ships from domestic maritime trade.

According to the U.S. Maritime Administration, the act can be set aside for national defense reasons by either the Department of Homeland Security or the Department of Defense.

The Jones Act was also meant to guarantee a ready merchant fleet for wartime. It has firm backing from segments of the U.S. shipping industry, national security proponents, and labor unions. However, the exclusion of foreign competition has raised the price of domestic cargo transport.

Operating and constructing U.S.-flagged ships is typically costlier than for foreign vessels. These elevated expenses particularly burden states and territories reliant on sea transport, like Hawaii and Puerto Rico.

Why is Trump waiving Jones Act requirements now?

Oil prices have surged and been volatile since the war with Iran began. With nearly all tanker traffic through the critical Strait of Hormuz stopped, major Middle Eastern oil producers have reduced output. Commercial vessels, which carry everything from fuel to pharmaceuticals and semiconductors, have also been idled or come under attack.

This is driving costs higher for businesses and consumers globally. On Wednesday, Brent crude, the global benchmark, traded near $109 a barrel, up from approximately $70 before the conflict. U.S. crude stood around $98 a barrel. American motorists are already facing sharply higher pump prices, with the national average for regular gasoline reaching $3.84 a gallon Wednesday, according to AAA—an increase of about 86 cents since before the war.

These conditions have nations seeking additional supply and different shipping paths. The White House confirmed last week it was considering a Jones Act suspension, which Trump labeled “restrictive.”

White House press secretary Karoline Leavitt said Wednesday the waiver would help “mitigate the short-term disruptions to the oil market” during the war and “allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports.”

Conversely, the American Maritime Partnership—a coalition of vessel owners, operators, unions, shipyards, and suppliers—expressed in a statement it was “deeply concerned” the 60-day waiver could be “abused and unnecessarily displacing American workers and American companies.”

The group, a long-time advocate for the Jones Act, also repeated that the move would have little impact on reducing consumer gasoline prices.

How could suspending Jones Act requirements impact gas prices?

Multiple elements influence pump prices, and many observers point out that relaxing domestic shipping rules is not a comprehensive solution.

The Center for American Progress projected last week that a Jones Act waiver might lower East Coast gasoline prices by a slight 3 cents per gallon, while potentially increasing costs on the Gulf Coast. The think tank added on Friday that the action “would also sideline American shipbuilders and workers and allow the oil industry to continue to profit from high prices while reducing transport costs.”

The U.S. is exploring other methods to increase oil supply. Also on Wednesday, the Treasury Department relaxed sanctions to permit U.S. companies to engage with Venezuela’s state-owned oil firm. The Trump administration has also said it will temporarily exempt Russian oil from U.S. sanctions.

Last week, the International Energy Agency committed to releasing 400 million barrels of oil from its members’ reserves, the largest emergency drawdown in its history. Trump, who had previously minimized the need to use reserves, confirmed the U.S. would contribute 172 million barrels from its Strategic Petroleum Reserve over 120 days as part of this effort.

Analysts stress these are temporary measures. Refineries purchase crude oil ahead of time, and new supply takes a while to reach consumers. Furthermore, price pressures could worsen if the conflict persists.

Although the U.S. is a net oil exporter, it is not insulated from global price surges. Oil is a globally traded commodity. Much of U.S. production is light, sweet crude, but refineries on the East and West coasts are mainly configured to handle heavier, sour crude. Consequently, imports remain necessary.

_______

AP Writers Seung Min Kim, Paul Wiseman and Collin Binkley in Washington contributed to this report.