White House Mulls Jones Act Waiver Amid Oil Price Surge

The White House is considering a temporary waiver of regulations requiring only American-built vessels to transport goods between U.S. ports. As oil prices surge amid war with Iran, the administration aims to lower transportation costs by allowing foreign ships to carry crude oil domestically.

South Korea's shipbuilding industry has long faced barriers to entering the U.S. maritime transport market due to this law. Industry observers are watching whether this development could accelerate related legislative reforms.

According to major wire services on the 12th (local time), White House Press Secretary Karoline Leavitt said in a statement: "We are reviewing a temporary exemption to the Jones Act to allow essential energy products and agricultural goods to flow freely into American ports for national security purposes."

Bloomberg, citing sources, reported that a 30-day waiver is under consideration covering crude oil, gasoline, diesel, liquefied natural gas (LNG), and fertilizers.

Only One Compliant Vessel on East Coast

The Jones Act, enacted in 1920, requires that goods shipped between U.S. ports be carried on American-built, American-flagged vessels. This has prevented the U.S. from efficiently transporting its own crude oil domestically, forcing reliance on foreign imports despite abundant domestic production.

According to the Cato Institute, a Washington D.C.-based think tank, approximately 7,500 tankers worldwide transport crude oil and refined products. Only 54 vessels meet Jones Act requirements.

High shipbuilding costs in the U.S. and limited vessel availability drive up freight rates. Transporting crude oil from the Gulf of Mexico near Texas to East Coast cities costs so much that importing energy from abroad becomes more economical.

"There is only one Jones Act-compliant crude carrier on the East Coast," the Cato Institute noted. "A temporary waiver adding more vessels would allow U.S. refineries to source oil from Texas more easily instead of importing from Libya or Nigeria."

However, the institute cautioned: "Transportation costs are just one of many factors determining gas prices at the pump. This won't dramatically lower fuel prices."

Implications for Korean Shipbuilders

The 30-day waiver period is too short to immediately benefit Korean shipbuilding and shipping industries. However, Tom Ramage, economic policy analyst at the Korea Economic Institute of America (KEI), told the Seoul Economic Daily: "This move implicitly acknowledges that the Jones Act creates friction in U.S. commerce and supply chains."

"This waiver review has opened a forum for discussing the Jones Act's role in the American economy," Ramage said. "Discussions could expand to include opening pathways for allied shipbuilders to play supporting roles in the U.S. merchant fleet."

This development could accelerate Jones Act reform debates. In June last year, the "Open America's Waters Act" to repeal the Jones Act was introduced in both the House and Senate, where it remains pending.