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The debate about lifting 1970s restrictions on crude oil exports has renewed another old fight over a 1920 maritime law known as the Jones Act.
The law requires cargo sent exclusively between domestic ports be moved by ships that are built, owned and operated by United States companies. Refiners say a shortage of American-flagged vessels is inhibiting crude oil shipments from the Gulf Coast to Mid-Atlantic refineries.
“You got to look at the Jones Act,” said Charles Drevna, president of the American Fuel and Petrochemical Manufacturers, a trade group that represents refiners and petrochemical companies. “I don’t care if it is crude oil, finished product or Twinkies.”
Drevna said the law should be changed to allow international shipping companies to move oil between U.S. ports. He said the law (PL 66-261) is no longer working.
“That’d be OK if there were enough American-flagged vessels,” Drevna said. “There just aren’t.”
Drevna represents some members who have profited from the shale oil boom and have reservations about sending oil overseas.
“We don’t oppose the export of crude,” he said. “We will support it fully if they look at everything else at the same time.”
He categorized the Jones Act as “anti-free-market” and said Congress should address it along with revising the renewable-fuel standard, making infrastructure improvements including the Keystone XL pipeline and lifting restrictions on exploration on federal lands.
“I think it should all be done together,“ he said. “Let’s talk about this as an energy policy.”
Any revision to the Jones Act would likely be met with vicious resistance from the U.S. companies that have invested in fleets that meet the specifications.
In December, pipeline giant Kinder Morgan paid almost $962 million to purchase nine Jones Act tankers, four of which are new orders to be delivered in 2015 and 2016.
The law is also supported by U.S. labor unions, which fear the loss of jobs to lower-wage foreign shipping companies if the Jones Act were eliminated.
In recent years, the law’s requirements have been waived in the aftermath of natural disasters. President Barack Obama temporarily suspended the Jones Act after Superstorm Sandy to help ease gasoline shortages in New York and New Jersey and President George W. Bush suspended the requirements after Hurricane Katrina to expedite relief efforts.