Federal Shipping Law Exacerbates Northeasterners’ Winter Woes

By:  Michael Tennant
03/03/2014
       
Federal Shipping Law Exacerbates Northeasterners’ Winter Woes

The federal Jones Act, a 1920 shipping law, is forcing the Northeast to import expensive foreign propane for heating homes and preventing New Jersey from getting salt it needs to keep its roads clear.

Residents of the northeastern United States suffering from high heating-fuel costs and icy roads can place much of the blame for their woes on a 94-year-old federal law — and the labor unions and shipping interests that profit from it.

The Merchant Marine Act of 1920, better known as the Jones Act, requires all shipments going from one U.S. port to another to be transported on ships built in the United States, owned by U.S. citizens, manned by U.S. citizens or permanent residents, and flying under the U.S. flag.

But what happens when the supply of such ships is insufficient to meet the demand for their services? Americans must then import the goods they need — assuming they are able — often at prices considerably higher than those of comparable domestic goods.

This is precisely what is happening in the Northeast. “With pipelines full and not a single eligible propane tanker to deliver fuel from Houston to states such as New York,” reports Bloomberg, “consumers have had to pay more than $100 a metric ton extra for propane from across the Atlantic.... The more than 3 percent of households in the Northeast that use propane as a main source of heating are expected to spend on average $206, or 11 percent, more on the fuel this winter than last, according to the U.S. Energy Information Administration.”

Ironically, this is occurring while the United States is in the midst of a shale oil and gas boom, with domestic energy production at a 17-year high. While the nation as a whole was exporting 373,000 barrels of these fuels per day during the first seven weeks of 2014, “imports of the fuels on the East Coast rose to a four-year seasonal high of 73,000 barrels a day,” Bloomberg notes.

“If you didn’t have the Jones Act, you could have had this thing resolved pretty easily by moving product off the Gulf Coast into the Northeast,” James Teague, the chief operating officer of Enterprise Products, which runs propane export and transportation facilities, said in a January 30 conference call, according to Bloomberg. “We don’t have that in our toolbox.”

The Jones Act has also interfered with winter road maintenance in New Jersey. State Transportation Department Commissioner James Simpson told nj1015.com that “the state’s salt supply is dangerously low,” but because of the Jones Act, “New Jersey has been unable to transport 40,000 tons of available road salt in Searsport, Maine[,] in time to meet the urgent need here.”

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