Wednesday, February 27, 2019

Jones Act imposes embargo on Puerto Rico

It's Time to Lift the Jones Act Embargo | Cato Institute - Colin Grabow:

February 20, 2019 - "Puerto Rico is currently under a de facto embargo imposed by Congress.... Puerto Rico finds it impossible to import U.S. liquefied natural gas — not despite being part of the United States, but because of it....

"Passed in 1920, the Jones Act mandates that ships transporting goods between two points in the United States must be U.S.-built, U.S.-owned, U.S.-crewed and U.S.-flagged. Of the 478 ships in the world capable of transporting liquefied natural gas, however, none meet these requirements.

"That’s a problem for Puerto Rico, which relies on LNG for 34 percent of its electricity generation and would like to use more to replace some of the oil and coal that produce 64 percent of its electricity. But with no ships to transport it, cheap U.S.-produced LNG has effectively been placed off limits....

"Puerto Rico applied in December for a waiver from the Jones Act so that the territory can import LNG from the U.S. mainland aboard foreign-flagged ships. This eminently sensible step, however, has been met with a swift bipartisan backlash. Rep. Peter DeFazio (D-Ore.) and Rep. Sam Graves (R-Mo.), the chairman and ranking member of the House Transportation and Infrastructure Committee, dispatched [a] letter urging the Trump administration to reject the waiver application.

"Never mind the fact that expanded access to natural gas would help replace dirtier fuels like oil and coal. Never mind that the Jones Act effectively condemns cash-strapped Puerto Rico to paying more for natural gas imported from abroad. Never mind that the waiver would not displace a single U.S. ship, as none are capable of transporting LNG in large quantities....

[T]he Jones Act is among Washington’s most sacred cows.... [S]pecial interests that support the law includ[e] shipyards dependent on the U.S.-build requirement and carriers shielded from foreign competition.... And so ... Democrats and Republicans, who struggle to ... keep the federal government open, are aligned on a law that denies Puerto Rico’s access to U.S. energy supplies and condemns them to purchasing more expensive LNG from elsewhere.... "

"It’s time for the Trump administration to grant the waiver and Congress to repeal the Jones Act."

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