Trump weighs shipping waiver renewal to ease oil, gas prices

[WASHINGTON] The Trump administration is weighing an extension of a maritime shipping waiver that has made it easier to move oil and petrol between US ports as the Iran war strains energy supplies globally, according to sources familiar with the matter.

Discussions are centred around renewing US President Donald Trump’s Mar 18 waiver effectively exempting oil, fuel and other commodities from requirements under the 1920 Jones Act that ships carrying goods between US ports be American-built, -flagged, and -operated vessels. That 60-day exemption is set to lapse in May.

No decision has yet been made, said the sources, who asked not to be named because the deliberations are private. Administration officials have been in talks with industry stakeholders seeking clarity about the planned approach, the sources added.

New data, first reported by Axios, underscore how much the waiver has been used during the war. According to the White House, the Jones Act waiver has either been used – or is about to be – by more than 40 tankers. It’s also enabled roughly nine million barrels of American oil to reach domestic destinations – with deliveries reaching California, Florida, Alaska and other states.

Supporters of the exemption say it’s made it possible for more US oil supplies to get to American refiners – and keep prices in check – as the world struggles to fill a 16 million barrel hole created by the effective closing of the Strait of Hormuz that normally carries about a fifth of global crude supplies.

Still, global energy prices have risen substantially in the past two months, with Brent crude, the international benchmark, climbing nearly 36 per cent and domestic prices for unleaded petrol increasing 35 per cent to an average of US$4.74 per gallon.

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Jones Act critics historically have argued the shipping mandates force the industry to rely on more expensive US-made and -flagged vessels, though for now, shipping costs have climbed even for tankers that are not compliant with the law. Advocates for the statute argue the requirements are necessary to sustain a domestic shipbuilding industry that’s essential for national security.

In recent weeks, oil industry representatives have encouraged the administration to renew the waiver, arguing it’s essential to keep American crude flowing to domestic refineries.

The issue came up during a teleconference that the heads of Trump’s National Energy Dominance Council – Interior Secretary Doug Burgum and Energy Secretary Chris Wright – held with US oil producers last week. And refiners have pressed administration officials to reveal their plans soon, as they book deliveries after the planned expiration. BLOOMBERG