US considers waiving Jones Act for fuel tankers

President Joe Biden's administration is considering a temporary waiver of domestic shipping restrictions in the Jones Act to mitigate fuel supply disruptions in the eastern US caused by the shutdown of the Colonial Pipeline fuel system.

The administration is considering lifting those shipping restrictions as the shutdown of the 5,500-mile (8,851km) pipeline runs for a fifth day, as a result of a ransomware attack Colonial Pipeline disclosed on 7 May. Waiving the Jones Act could offer a new outlet for gasoline, diesel and jet fuel inventories building up on the US Gulf Coast to reach markets in the eastern US that are served by the 2.5mn b/d pipeline.

But the administration said it has not decided if waiving the Jones Act is necessary.

"That need is not necessarily yet confirmed, but we wanted to be poised at the president's direction to be ready and to be able to act immediately," US homeland security secretary Alejandro Mayorkas said today.

The century-old Jones Act requires shipments between domestic ports to occur on US-flagged, US-crewed and US-built vessels. But every available Jones Act vessel in the US Gulf coast that can carry refined products has already been booked since the pipeline shut down on 7 May, according to one shipbroker.

US shipping operators have also laid up nearly third of the Jones Act fleet because of pandemic-related weak demand to cut costs. Shipping sources estimate that it could take weeks to get the ships ready to carry cargoes, limiting their usefulness in alleviating the supply shortages in the US east coast.

The US Maritime Administration said today it started a survey of Jones Act-qualified vessels that are capable of carrying petroleum products in the Gulf of Mexico and up the US east coast. That will allow the government to determine if there is enough capacity on existing vessels to carry petroleum products and decide if a waiver is warranted, the agency said.

Mayorkas said the administration would move at "lightning speed" to finish the analysis of the Jones Act fleet.

Biden has said he supports the Jones Act. Biden signed a "Buy American" executive order on 25 January where he reiterated his "strong support for the Jones Act and its mandate that only US-flag vessels carry cargo between US ports," according to a summary from the White House at the time.

In response to the Colonial Pipeline outage, the administration has already waived hours-of-service restrictions on tanker trucks in 17 states. The US Environmental Protection Agency today waived summer gasoline requirements in three states.

By Chris Knight