Posted on November 30, 2022
The Northeast faces the prospect of a tough winter ahead as residents and businesses grapple with the low supply and high cost of diesel. Some energy companies, alongside the usual opponents of the Jones Act, are calling for a blanket waiver of our bedrock “ship American” law, claiming a Jones Act waiver would increase inventory and lower the price of diesel in the region. It will not.
Opening domestic transportation routes to foreign vessels and foreign mariners would provide no relief to struggling citizens in New England (or anywhere else in the United States), while needlessly putting waterways safety, supply chain reliability and homeland security at risk.
First, the reduced supply and increased cost of diesel from Massachusetts to Maine has nothing to do with marine transportation. Diesel production on the U.S. Gulf Coast is robust, but stocks in New England are low because energy traders can make more money selling their product overseas, where demand has skyrocketed, than by selling it to domestic buyers in the Northeast. Data from the U.S. Energy Information Administration (EIA) bears this out: as of late October, U.S. petroleum exports reached 11.4 million barrels a day, with daily exports of diesel up 50 percent since last year.
The most efficient way to move petroleum products from Gulf Coast refineries up the East Coast is by pipeline, which is cheaper than U.S. or foreign-flag vessels. However, for most of 2022, the Colonial Pipeline has not been fully booked because so much product has been exported. This makes clear that a lack of cost-effective transportation options is not the reason for the low supply and high cost of diesel in New England.
It’s also worth noting that the cost of transporting fuel by vessel, whether American or foreign-flag, is a small fraction of the cost to the end user. Indeed, the impact of domestic shipping costs on the national average cost of fuel across the U.S. market is less than $0.01 per gallon. The potential “savings” from a Jones Act waiver is thus minuscule—and, if past experience with waivers is any guide, it will be foreign energy traders, not American consumers and businesses, who reap any benefit.
Misdirected calls for Jones Act waivers also ignore the fact that the American maritime industry in general – and the tugboat, towboat and barge industry in particular—is a critical part of the solution to bringing much-needed fuel to Americans this winter.
The U.S. tank barge fleet includes some 4,000 tank barges nationwide, including roughly 120 large coastal tank barges that can carry tens to hundreds of thousands of barrels per vessel. Along with the fleet of U.S. petroleum product tankers, these barges play a vital role in keeping American households and businesses supplied with energy. In the wake of the cyber-attack on the Colonial Pipeline in 2021, for example, barges were essential to keeping gas stations open in river-served cities like Nashville, Tenn., and Paducah, Ky.
Keeping the supply chain moving no matter the challenge at hand is all in a day’s work for America’s tugboats, towboats and barges and the skilled American mariners who operate them, as demonstrated repeatedly throughout the COVID-19 pandemic. Outsourcing work from American companies, vessels and mariners to foreign operators would harm the people of American maritime while doing nothing to alleviate diesel supply or cost concerns in the Northeast.
The American tugboat, towboat and barge industry is not only highly efficient, but also extremely safe, a must when transporting sensitive commodities like petroleum products and chemicals. In July, the industry marked a major safety milestone, with all towing vessels now required under Subchapter M to possess a Coast Guard-issued Certificate of Inspection to operate. Foreign vessels would not be subject to those or other U.S. safety regulations while navigating our domestic waters, putting people and the marine environment at risk. This would further strain the resources of the U.S. Coast Guard and complicate its marine safety as well as its homeland security mission, which American mariners reliably support every day on our rivers, coasts and Great Lakes.
The people of the Northeast deserve real solutions to the energy crisis they are confronting, not soundbites masquerading as thoughtful public policy. The tugboat, towboat and barge industry is ready to work with government officials and energy companies to provide real solutions that help our fellow Americans in New England navigate the challenging winter ahead.
