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The drama of Jones Act follies

The drama of Jones Act follies
In the days leading up to the first primary voting in the 2016 Presidential election, economic, defense and social issues matter little. Instead, the drama- and, hence, attentions of media and therefore voters have been on the sidelines as Donald Trump jousted with Fox News. So it goes with the nearly 100 year old Jones Act, which protects US coastal trade, and trades to Hawaii and Puerto Rico, for US built vessels.

It is impossible to prove whether the Jones Act is good or bad, any attempts at consultants’ studies invariable degenerate into preachy Gospel-like statements parroting back talking points from whichever side commissioned the particular economic study. This past week, a lively battle ensued between a group called The Alliance for Innovation and Infrastructure (against) and the American Maritime Partnership (in favour). Like Trump with his media savvy strategies, the AMP, which describes itself as the voice of the domestic maritime industry, has clearly won this battle, as it lashed out hard at the way out-gunned AII, led by former military officers, according to the AMP.

Tanker market observers have grown tired, by now, of the familiar anti Jones Act refrain that says: “to figure out the delivered cost of oil moving from Texas to New England by tanker, the buyer must incorporate an extra $6 per barrel of shipping costs. The delivered cost of oil from the same port in Texas to Canada will be far less far less since the shipping costs only adds about $2 per barrel.”

This quote, bullet-pointed by opponents of the Jones Act before the tanker boom now in its second year, comes from Forbes, a one-time serious business publication, the only name brand business publication to pick up the AII’s article. Amusingly, the Forbes contributor who cites the AII report, misses the Jones Act start date by 100 years, telling readers “Much has changed in the last one hundred years, so it only makes sense to overhaul or at least revisit this relic from the early 19th Century.” Such an error is far more egregious than quoting tanker rates from 2013, illustrative of the sloppiness injected into this dialogue.

Further amusement can be found in the august sources referenced in the AII report- trade outlets- with limited editorial oversight when it comes to publication of whatever press release arrives “over the transom”.

In this latest skirmish, the AMP demanded a retraction of the AII’s assertions, and cited more than a dozen of what it labeled as erroneous claims. Ironically, the AII report – describing a 2013 Congressional report, acknowledges the inability for commentators (from either side) to provide economic clarity on the issue. The U.S. government had said: “The ultimate conclusion of the report is that there are too many factors affecting prices and economic trends to attribute a significant blame to the Jones Act and that the effects of modifying the Act are uncertain.”

AMP, though bathed in talking points, at least gets the point that this discussion should be shifted beyond the realm of objective $ per ton and $ per day calculations; do not attempt to impose a layer of economics that is so riddled with holes as not to be seaworthy.

The AII report can be found at:

The Forbes piece can be found at:

The AMP response can be found at: