Jones Act Waiver May Help Gasoline Prices A Little, but Effects Will Be Limited

      The U.S. government issued a 60-day waiver of the 1920 Jones Act on March 18 which allows foreign-flagged tankers to transport crude oil and refined products between U.S. ports. The goal is to keep gasoline prices low, but its effect on prices might not be enough to notice, say some. The original goal of the law was to protect the U.S. shipping and shipbuilding industry and to ensure a reliable merchant fleet for national defense and emergency response.

     According to RBN Energy’s Lisa Shidler:

“In the energy sector, the Jones Act fleet breaks down into five main vessel types: smaller inland barges that typically carry about 10 Mbbl or 30 Mbbl of crude or refined products on rivers and coastal canals; regional offshore tank barges (such as those in New York Harbor) with capacities of 50 Mbbl to 135 Mbbl; coastal barges, including larger articulated tug barges (ATBs) with capacities of roughly 142 Mbbl to more than 320 Mbbl; product and crude tankers that run in coastal and international trades and generally carry around 330 Mbbl; and large crude tankers dedicated to the Alaskan trade.”

“According to Bloomberg and RBN data, there are currently about 101 Jones Act-eligible ships in the market today. That number was as high as 400 ships in 1950, with the count largely flat but edging lower over the past decade.”

     The Jones Act is costly for the U.S. and transport using non-U.S. ships could lower costs.

“We’ll note that by far the largest Jones Act refined product movements occur between various Gulf Coast ports and destinations on both coasts of Florida (>700 Mb/d), which aren’t served by pipelines.”

     White House Press Secretary Karoline Leavitt noted the rationale for waiving the requirement for 60 days:

“This action will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for 60 days, and the administration remains committed to continuing to strengthen our critical supply chains.”

     This is not the first time a Jones Act waiver has been issued. RBN’s Shidler explains:

“Most recently, after Hurricane Fiona in 2022, the Biden administration approved a temporary waiver allowing one foreign-flagged tanker carrying about 300 Mbbl of diesel to deliver fuel to Puerto Rico, easing concerns about generator supplies. In 2017, during Hurricane Maria in Puerto Rico, President Trump authorized and DHS issued a 10-day waiver covering goods shipped to the island to support emergency relief. During hurricanes Harvey and Irma in 2017, a temporary waiver was also granted, allowing foreign ships to carry refined petroleum products, including gasoline, diesel and jet fuel, from the Gulf Coast to the East Coast. In 2005, DHS issued an 18-day waiver allowing foreign-flagged tankers to move petroleum and petroleum products between U.S. ports after Gulf Coast pipelines and refineries were disrupted by Hurricane Katrina, followed by a similar waiver after Hurricane Rita a few weeks later.”

     Below, she explains potential effects of the waiver on U.S. refiners:

“It makes it more expensive to move crude and products between the U.S. coasts, which can prop up East Coast prices and cap how many barrels from the Gulf Coast can flow there. Dropping that coastwise premium could widen the outlet for Gulf Coast barrels and help refinery economics there, making it easier and cheaper to push more light crude and products into domestic coastal markets rather than exports. For East Coast refiners, it’s more of a double‑edged sword. Their costs might improve with more Gulf Coast light sweet crude potentially able to move coastwise at lower cost, but competition from Gulf Coast refineries on the product side would also intensify.”

     She also explains how California’s refinery closures have led to a situation where the Jones Act requirements have been circumvented in recent years via a “two-step movement of gasoline blendstocks from Gulf Coast refineries to the Bahamas on foreign-flagged vessels, where a very modest “manufacturing/blending operation” takes place and then is re-shipped to U.S. West Coast markets.” The waiver could allow the trip to the Bahamas so that a more direct and much cheaper route could deliver refined products from the Gulf Coast to California.

     She also notes that the Renewable Fuel Standard increases fuel prices even more than the Jones Act:

“Before we close, we should note another government policy that impacts fuel prices: the Renewable Fuel Standard (RFS) program. This very complex policy, which mandates that refiners include specified minimum amounts (on a percentage basis) of renewable components (ethanol, renewable diesel and sustainable aviation fuel, or SAF) into their overall production, adds significantly more costs at the pump than any other government program (including the Jones Act).”

    

    

References:

 

Me and Mrs. Jones – White House Issues Jones Act Waiver, But Market Impact Could Be Limited. Lisa Shidler. RBN Energy. March 18, 2026. Me and Mrs. Jones – White House Issues Jones Act Waiver, But Market Impact Could Be Limited | RBN Energy