Rescinding Jones Act First Step to Lowering Gas Prices

American consumers lose patience, not only with the price at the pump, but with anyone who might be in a position to do something about it.


Gregg Laskoski is a senior petroleum analyst for

Just how bad have gasoline prices really gotten if folks in Los Angeles ($4.37 per gallon) and Chicago ($4.07 per gallon) look at New York City as a relative bargain ($4.01 per gallon)? Isn't it the East Coast that has the biggest refinery problems, lost capacity, and over-reliance on Brent crude?

And the ides of March is still ahead of us. With steadfast consistency we continue to see the average price of gasoline nationwide climb steadily as the world awaits what might happen in the Middle East.

Will Iran be the aggressor? Will Israel launch a first strike? Should Israel believe inertia is in its own best interest? Will President Obama commit U.S. troops to Israel's defense? As early indicators of answers to any of these questions develop, global crude oil prices move accordingly. American consumers lose patience, not only with the price at the pump, but with anyone who might be in a position to do something about it.

[See a collection of political cartoons on gas prices.]

Concurrently, all kinds of potential remedies emerge; some from predictable places. Others, less so. Republican Sens. David Vitter of Louisiana, John Hoeven of North Dakota, and Richard Lugar of Indiana came up with a plan, SB 2100, that would prevent President Obama from tapping into the U.S. Strategic Petroleum Reserve unless the Keystone XL pipeline is approved. That may have some traction.

But even more attractive is an idea proposed recently by Lucian Pugliaresi, president of the Energy Policy Research Foundation, and Stephen Schork, an energy expert who is the founder and editor of The Schork Report.

In recent weeks both Schork and Pugliaresi have presented clear and compelling arguments for expediting the Keystone XL pipeline and making low cost Canadian crude more accessible to East Coast markets. Refineries there are too dependent on Brent crude that is bought at a significant premium (sometimes $20 per barrel more than West Texas Intermediate crude oil) and that's one reason why Pennsylvania refineries are closing.

[Read the U.S. News debate: Is Obama to Blame for High Gas Prices?]

How might Canadian crude reach the Northeast? Rescind 1920's Jones Act. That was a protective piece of legislation that required all goods transported between U.S. ports be carried in ships built, owned, operated, and crewed by Americans. Since the existing fleet is committed to long-term charters, the Jones Act is what prevents the U.S. energy industry from shipping Canadian crude from Texas up into the Northeast where it is badly needed.

And as Pugliaresi noted, the East Coast refinery losses grow much worse this summer. If Sunoco is unable to find a buyer and closes its Philadelphia refinery in July, as scheduled, that will be the third Pennsylvania refinery (and the largest of the three at 335,000 barrels per day capacity) to close since September 2011.

Rescinding the Jones Act is a reasonable move. It's logical and it's smart.

But this is an election year… I guess it hasn't got a chance.

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