What Is the Jones Act — And Why It Cannot Fix Gas Prices
Every time gas prices spike in America, a century-old maritime law gets blamed for making everything worse. The Jones Act — formally known as Section 27 of the Merchant Marine Act of 1920 — has spent over 100 years being simultaneously defended as a pillar of American national security and attacked as an economic relic that costs consumers billions of dollars annually. On March 18, 2026, as gas prices hit nearly $4 per gallon following the US-Iran war's disruption of the Strait of Hormuz, President Trump issued a 60-day waiver of the Jones Act — the most significant suspension of the law since Hurricane Katrina in 2005. Within hours every expert the major news organizations could reach delivered the same verdict: it will not make a meaningful difference at the pump. Understanding why requires understanding what the Jones Act actually does — and what it does not do.
What the Jones Act Is and Has Always Been
The Jones Act was passed by Congress in 1920 — six years after World War I exposed a catastrophic weakness in American maritime capabilities. When the war began the United States did not have enough American-flagged ships to supply its own military or its allies across the Atlantic. Congress concluded that the country needed a permanent domestic maritime industry capable of supporting military operations without depending on foreign vessels that could be requisitioned, destroyed, or denied at the outbreak of conflict.
The solution was a simple but sweeping rule — any goods transported between two American ports must travel on ships that are built in the United States, owned by Americans, flagged under the American flag, and crewed primarily by American citizens or permanent residents. The requirement applies to cargo moving from Houston to New York, from the Gulf Coast to Puerto Rico, from mainland Alaska to Anchorage. If goods move between American ports on water, the ship carrying them must meet all four Jones Act requirements simultaneously. Missing any single one disqualifies the vessel.
The practical consequence of those four requirements is significant. American-built ships cost approximately five times more than equivalent vessels built in South Korea, Japan, or China — the world's dominant shipbuilders. American crews are more expensive than crews from countries with lower wage standards. American regulations are more stringent than many foreign alternatives. The result is a domestic fleet that is dramatically smaller and more expensive to operate than what the global market would otherwise provide. There are currently only a few dozen Jones Act-qualified tankers capable of moving oil between American ports — a number that is entirely inadequate to serve a country with the world's largest petroleum consumption.
Why Trump Waived It — The Political Logic
Gas prices before the Iran war began on February 28 averaged $2.98 per gallon nationally. By March 18 — eighteen days into the conflict — the national average had risen to $3.84, an increase of 86 cents per gallon in under three weeks. Diesel hit nearly $5 per gallon. Trump had campaigned explicitly on lowering energy prices and the Iran war was threatening to become the defining economic story of his second term.
The Jones Act waiver was the most visible and symbolically significant action the administration could take quickly to signal it was doing something about gas prices. The waiver allows foreign-flagged ships to transport oil, natural gas, fertilizer, and coal between American ports for 60 days — lifting the requirement that such shipments use the limited and expensive fleet of American-qualified tankers. White House press secretary Karoline Leavitt described it as a step to mitigate short-term disruptions and allow vital resources to flow freely to American ports.
Why It Will Not Fix Gas Prices — The Economic Reality
The consensus among energy economists and maritime law experts is remarkable in its unanimity — and it goes directly against what the administration's framing implies. The Jones Act does not fix gas prices because domestic shipping costs are not what is causing gas prices to rise.
Oil is a globally traded commodity priced on international markets. The primary driver of what Americans pay at the pump — 40 to 50 percent of the retail price — is the global benchmark price of crude oil. That price is determined by supply and demand across the entire world market, not by the cost of moving oil from Houston to Boston on a domestic tanker. The closure of the Strait of Hormuz has removed approximately 20 percent of global oil supply from world markets. That removal has driven global crude prices from roughly $70 per barrel before the war to nearly $109 per barrel as of March 18. The Jones Act has no effect on that price. It never did.
The maximum impact of domestic shipping costs on the retail price of gasoline nationwide has been estimated by the American Maritime Partnership — the industry group that represents Jones Act beneficiaries and therefore has the strongest financial interest in making the Jones Act look important — at less than one penny per gallon. A former commissioner of the US Federal Maritime Commission who served under both Trump and Obama stated publicly that any savings from the waiver would be just fractions of a penny per gallon. An analyst at the University of Chicago's Energy Policy Institute described Jones Act waivers as a sideshow and said they are inadequate to address a global oil supply disruption of this unprecedented magnitude.
What the Waiver Does Actually Help — Limited But Real
The honest assessment of the Jones Act waiver is not that it does nothing — it is that what it does is far more modest than the political framing suggests. The waiver provides some genuine operational benefit in specific, limited circumstances. Moving petroleum products from the Gulf Coast to the East Coast or West Coast refineries is one area where the limited supply of Jones Act tankers creates genuine bottlenecks during periods of disrupted imports. The waiver removes that bottleneck — allowing foreign tankers to move domestic crude and refined products more efficiently along American coasts.
The Port of Los Angeles executive director Gene Seroka acknowledged the waiver helps in a limited way. A JPMorgan analysis from 2022 estimated that a Jones Act suspension during an energy disruption could save East Coast motorists approximately 10 cents per gallon over time — not immediately, because the marine industry needs weeks to respond to changed regulations, but eventually as additional shipping capacity is deployed. Ten cents per gallon when gas is approaching $4 is welcome relief but it is not transformation.
The waiver also works in combination with the Strategic Petroleum Reserve release — 172 million barrels being released over 120 days — and the International Energy Agency's unprecedented release of 400 million barrels from member nations' reserves. Together these measures can ease the domestic supply picture at the margin. None of them address the underlying problem, which is a global oil price spike driven by a military conflict that has effectively removed one-fifth of world oil supply from the market.
The Deeper Debate — Should the Jones Act Exist At All
The 60-day waiver has reignited the perennial argument about whether the Jones Act should be permanently repealed rather than occasionally suspended. Proponents of repeal argue the law has failed its original national security purpose — the US domestic maritime fleet has declined precipitously over the decades regardless of Jones Act protection, and the fleet that exists is inadequate to supply American military needs without foreign vessels anyway. They argue the law primarily benefits the small number of companies that operate Jones Act-qualified ships at the expense of American consumers and American territorial economies like Hawaii, Alaska, and Puerto Rico, which must pay dramatically higher shipping costs for basic goods as a result of the law.
Opponents of repeal — primarily maritime unions and the domestic shipbuilding industry — argue that eliminating the Jones Act would destroy what remains of American maritime manufacturing capability and make the country permanently dependent on foreign shipping for domestic commerce. They note that every major maritime nation protects its domestic shipping industry and that the national security rationale for doing so has not expired. They point out that the Jones Act workforce — tens of thousands of American sailors, shipyard workers, and related trades — would be devastated by elimination of the law.
The legal reality is that the Jones Act can only be permanently repealed by an act of Congress — and the political economy of maritime states, maritime unions, and defense interests has consistently blocked full repeal even when economists have made compelling cases for it. The 60-day waiver is not a step toward repeal — it is a temporary safety valve that the law explicitly permits during national emergencies affecting military operations.
For the complete text of the Jones Act and detailed analysis of how the 60-day waiver changes domestic energy shipping operations, the US Maritime Administration at maritime.dot.gov provides official guidance on waiver implementation and eligible vessel categories. The most comprehensive economic analysis of the Jones Act's long-term effects on American consumer prices and territorial economies is maintained by the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies at cato.org.
The Jones Act waiver of March 2026 is a textbook example of the gap between political communication and economic reality. The administration needed to show it was doing something about gas prices. The Jones Act was visible, controllable, and familiar enough that most Americans had at least heard of it. Waiving it for 60 days accomplished those political objectives entirely — it is a tangible, dramatic-sounding action that generates headlines and signals urgency. What it will not accomplish is bringing gas prices down by any amount that ordinary Americans will notice at the pump. For that, there is only one effective remedy — reopening the Strait of Hormuz. And no act of Congress, no executive waiver, and no strategic reserve release can substitute for the geopolitical solution that so far nobody has found a way to deliver.
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