The Bane of the shipping industry

beschmutzer — Fri, 19 Apr 2013 19:12:17 +0000

Many people are asking the question: “Why have gas prices gone up so much?” The most common answer is one which sites the lack of a large, central pipeline to carry crude oil from distant locales in the western United States. While these statements do have some validity, as the inefficiency of current transport systems has caused a considerable bottleneck in areas such as Oklahoma and The Dakotas. However, a larger and much lesser known factor plays a large role in the continual uptrend in current gasoline prices. An obscure piece of legislation known as the Jones Act.

Introduced in 1920 as a part of the Merchant Marine Act, the Jones Act outlines laws on shipping between US ports. The regulations are as follows:

- Any ship transporting cargo or passengers between two US ports must be US-built and flagged.

- At least three-quarters of the crew of any such ship must consist of United States citizens.

- The use of foreign steel in the repair of US-flagged ships is restricted to ten percent the weight of the vessel.

One can see the ramifications of such protectionist measures on US industries and consumers. The restriction of transport to US companies significantly increases the cost of business for companies which routinely enlist the services of shippers. Namely, oil companies, whose business depends upon the ease with which they can circulate their product throughout the world. The higher cost commanded by US shipping companies will ultimately be passed on to the consumer at the gas station.

This is why it is my belief that the repeal, or at least significant overhaul of the MMA of 1920 is in the best interest of the entire US economy. Protectionism such as is epitomized in the Jones Act may have been appropriate in the spectacular economic climate of the 1920′s, but shortly after said times, the world realized the disastrous consequences of an overly protectionist mindset.

Pain Growing At The Pump

asaunders — Sat, 16 Apr 2011 18:57:00 +0000

DETROIT (WWJ) - Drivers in Washington, D.C. Saturday joined motorists in five states who are paying more than $4 per gallon for gasoline. Michigan isn’t on the list. But oil analyst Patrick DeHaan says drivers won’t get a break anytime soon.

“Looking at gasoline futures which are also traded similar to crude, closed up about 6 cent per gallon, depending on which part of the country, and so unfortunately, what that means is that 6 cents a gallon will be coming down to the pump level in a matter of days,” says DeHaan.

DeHaan says it would be smarter to fill up at the gas station this weekend with the price of gas expected to rise again next week.

Gas prices have gone up nationally for 25 consecutive days.

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The Bane of the shipping industry

Pain Growing At The Pump