Jones Act Waivers - SPR Release

As I’m sure everyone is well aware of, President Obama authorized a 30 million barrel release from the U.S. Strategic Petroleum Reserve back in June. While the release itself is somewhat controversial, I would rather not talk about that. A current question though, is the waiver of the Jones Act for the transportation of the crude oil released.

For background, the Jones Act basically requires that U.S. ships be used for transportation between U.S. ports.

Merchant Marine Act of 1920 Wikipedia

The Obama administration has provided numerous waivers of the Jones Act to allow foreign vessels to transport this crude. The following is a relevant article.

NYT: Oil Reserves Sidestep U.S. Vessels

U.S. Senator from Louisiana, Mary Landrieu has sent a letter to Obama criticizing the waivers. Bipartisan Letter Criticizes Waivers of Jones Act (8/26)

So, is this a big deal? I’m not big on these types of restrictions (Jones Act), but it seems that there is not a compelling national security reason to waive them in this case. We do have ships available that meet the DOE requirements, but it can be done easier and cheaper with foreign vessels. That does not seem to meet the requirements of a waiver.

Assuming for the sake of argument that releasing the oil made a significant dent in gas prices…

I wouldn’t say it’s a big deal legally; Rep. Peter King of NY said it appeared that the formal legal steps needed to get the waiver had been met. Economically it may be a wash; some domestic shippers didn’t get the benefit of a protectionist law, but consumers nationwide benefited from lower gas prices. As for the politics, not a big deal, but it’s more evidence of Obama’s technocratic myopia. Taken alone, getting the oil out quickly is the right thing to do, but if the reason for doing so is economic, then taking business away from domestic shippers would appear to undermine that rationale. The administration is once again missing the forest for the trees.