| Print | Close Window | AMO Currents - Posted: May 7, 2012 |
How to accommodate Jones Act critics in key markets
National President
If I were a businessman or a lawmaker hoping to crack the Jones Act in the oil and petroleum product trades, I'd be encouraged by a federal agency's apparent aversion to accuracy with respect to the domestic tank vessel fleet's capabilities.
The agency in question is the Energy Information Administration, which appears willing to accommodate Jones Act critics on this front. As we report elsewhere in this issue, the EIA refuses to own up to its mistaken conclusion last February that there may not be enough Jones Act tank vessels to deliver gasoline and other fuels from the Gulf Coast to the Northeast if a Pennsylvania refinery closes later this year - a real possibility at this writing.
In its report on the likely consequences of this refinery coming off line, the EIA undercounted the domestic tank vessel fleet by a whopping 50 percent by including only self-propelled ships in its fleet total. The agency overlooked or ignored a sizable number of tank barges capable of meeting Northeast energy needs if necessary.
The American Maritime Partnership - a coalition of Jones Act vessel operators, dredging companies and shipyards - pointed this out to the EIA, and the agency acknowledged its error. But the EIA ultimately held fast to its flawed initial finding and refused to amend its report in the interest of a fair, accurate and complete public record.
As a result, it is not inconceivable that advocates of Jones Act rollback or repeal will capitalize quickly on the Energy Information Administration's obstinate, dangerous position. They can zero in with a vengeance on the Jones Act as it applies to energy shipments by arguing a Jones Act deficiency that doesn't exist. If these advocates are called out on their claims, they can simply cite the EIA's slipshod statistics.
This stunning development followed the far-from-settled flap over the Jones Act and the Strategic Petroleum Reserve.
Last summer, the administration waived the Jones Act at least 48 times to allow foreign-flagged tankers to carry crude oil drawn down from the Strategic Petroleum Reserve directly between U.S. ports - despite the availability of suitable Jones Act tonnage for these shipments. These waivers were eased by the Department of Energy, which set the required minimum per-voyage cargo load at a level just a bit higher than the capacity of the largest single available Jones Act tanker.
The problem at this point is that this could happen again this year. Many analysts expect another drawdown from the oil stockpile during the summer driving peak in an attempt to defuse increasing gasoline prices as a Presidential campaign issue - despite the minimal impact a new SPR drawdown would have on the market and the price at the fuel pump. The SPR represents a relatively small amount of crude, and this oil must be refined and delivered before it can be sold as fuel - it would take a long, long time for gasoline and other petroleum products made from SPR crude to reach American consumers.
If a new SPR drawdown gets the go-ahead, public and private interests promoting a new round of waivers would most likely contend again that are too few Jones Act vessels to move the crude - just ask the Energy Information Administration.
After last year's Jones Act waivers, Congress approved what American Maritime Partnership called "new requirements - intended to increase the use of U.S.-flag vessels in future Strategic Petroleum Reserve drawdowns."
In response, the administration told AMP that no decision had been made on whether to open the SPR again. The administration also said the White House - pledged to "faithful implementation" of the Jones Act - would "continue to operate consistent with the Jones Act" and comply with the new Congressional mandates if more oil is released from the SPR this year.
The phrase "continue to operate consistent with the Jones Act" implies that the law had been followed with respect to the SPR shipments a summer ago, but it didn't go that way. The "faithful implementation" of the Jones Act would not have left qualified Jones Act vessels at coastal docks while the SPR cargoes moved freely between U.S. ports under foreign flags - one inventive way around the Jones Act could lead easily to another.
Seagoing AMO members should see these developments as credible threats that could escalate and, in time, put every domestic coastal, Great Lakes and inland waters AMO job at real risk. In the deep-sea sector, every lost Jones Act billet would mean three lost jobs for our union, and every lost Jones Act billet in every trade would mean lost employer contributions to the AMO benefit funds that serve all AMO members and their families.
With so much at stake, I ask again that everyone in our union join me in support of the American Maritime Officers Voluntary Political Action Fund to the greatest possible extent so that AMO has its traditionally strong voice in any new Jones Act debate on Capitol Hill.
As always, I welcome comments and questions from AMO members everywhere. Please feel free to call me on my cell at (202) 251-0349.
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