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"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude + domestic shipping cost" (emphasis mine). One reason that domestic

"overseas oil, even after shipping costs, is often cheaper than domestically-produced crude + domestic shipping cost" (emphasis mine). One reason that domestic shipping cost is so high is that 1920 Jones Act[0] prohibits shipping between US ports with non-US ships. This drastically reduces competition and increases prices. Hawaii are particularly hit by this, with estimate $1800 per year per family in extra cost [1]. [0] https://en.wikipedia.org/wiki/Jones_Act_(sailor_rights) https://en.wikipedia.org/wiki/Jones_Act_(sailor_rights) [1] https://www.wsj.com/articles/jonesing-to-give-up-russian-oil-hawaii-jones-act-11646176174 https://www.wsj.com/articles/jonesing-to-give-up-russian-oil...

istjohn 5y ago
>> One of the primary impetuses for the law was the situation that occurred during World War I when the belligerent countries withdrew their merchant fleets from commercial service to aid in the war effort. This left the US with insufficient vessels to conduct normal trade impacting the economy. Later when the U.S. joined the war there were insufficient vessels to transport war supplies, materials, and ultimately soldiers to Europe resulting in the creation of the United States Shipping Board. The U.S. engaged in a massive ship building effort including building concrete ships to make up for the lack of U.S. tonnage. The Jones Act was passed in order to prevent the U.S. from having insufficient maritime capacity in future wars. [1] 1. https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920#National_security https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920#Na...
sirspacey 5y ago
This is such a fascinating look at how commerce doesn’t just mean “economic commerce.” We experienced this with supply shocks with COVID as well. It’s interesting to balance “have the ability to meet our needs logistically” with “don’t create price cartels that cause inefficiency in the market.” Seems we’d have a vested national security interest in both securing commerce and enabling price competitiveness.
gowld 5y ago
That could be fixed by a tariff on underpriced foreign oil.
- lmm 5y ago
  Or indeed on goods shipped under flags that do not uphold decent labour standards.
ethagknight 5y ago
I’ve never understood the Jones act argument. If there was really an opportunity here, SOMEONE would have a US-flagged ship running oil up and down the coastline, but existing pipelines and trucking and foreign exports are easier. Can’t speak to Hawaii, maybe that it has 100% import and no natural gas?
- axiolite 5y ago
  > SOMEONE would have a US-flagged ship running oil up and down the coastline A US flagged ship means following US regulations, too. Can't pay slave wages, can't have an awful safety record, etc. Increases the cost of shipping.
- xyzzyz 5y ago
  It also has to be US built and US staffed, which brings up the cost a lot.

istjohn 5y ago

>> One of the primary impetuses for the law was the situation that occurred during World War I when the belligerent countries withdrew their merchant fleets from commercial service to aid in the war effort. This left the US with insufficient vessels to conduct normal trade impacting the economy. Later when the U.S. joined the war there were insufficient vessels to transport war supplies, materials, and ultimately soldiers to Europe resulting in the creation of the United States Shipping Board. The U.S. engaged in a massive ship building effort including building concrete ships to make up for the lack of U.S. tonnage. The Jones Act was passed in order to prevent the U.S. from having insufficient maritime capacity in future wars. [1] 1. https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920#National_security https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920#Na...

sirspacey 5y ago

This is such a fascinating look at how commerce doesn’t just mean “economic commerce.” We experienced this with supply shocks with COVID as well. It’s interesting to balance “have the ability to meet our needs logistically” with “don’t create price cartels that cause inefficiency in the market.” Seems we’d have a vested national security interest in both securing commerce and enabling price competitiveness.

gowld 5y ago

That could be fixed by a tariff on underpriced foreign oil.

lmm 5y ago
Or indeed on goods shipped under flags that do not uphold decent labour standards.

ethagknight 5y ago

I’ve never understood the Jones act argument. If there was really an opportunity here, SOMEONE would have a US-flagged ship running oil up and down the coastline, but existing pipelines and trucking and foreign exports are easier. Can’t speak to Hawaii, maybe that it has 100% import and no natural gas?

axiolite 5y ago
> SOMEONE would have a US-flagged ship running oil up and down the coastline A US flagged ship means following US regulations, too. Can't pay slave wages, can't have an awful safety record, etc. Increases the cost of shipping.
xyzzyz 5y ago
It also has to be US built and US staffed, which brings up the cost a lot.