Trump suspends the “Jones Act” for 60 days.. Will it restore stability to the oil markets?
On Wednesday, US President Donald Trump issued a temporary 60-day exemption from the so-called US shipping law "Jones Act"in an attempt to stabilize Oil markets amid the war with Iran. White House spokeswoman Carolyn Leavitt said in a statement: "Temporary suspension of the Jones Act will allow critical resources, such as oil, natural gas, fertilizer and coal, to flow freely into US ports for 60 days.". In this context, questions have arisen about the Jones Act, and whether it is possible to control the skyrocketing energy prices.
What is the Jones Act?
The Jones Act, also known as the Maritime Trade, by former US President Woodward Wilson in 1920, and the aim of this law was to develop the local shipping sector after World War I. This law has been criticized as a form of protectionism. The Jones Act stipulates that goods be transported between American ports by American ships. The law also requires the protection of the jobs of US citizens and individuals working in US ports and on US ships.
Trump suspends the Jones Act
Trump’s two-month exemption from the Jones Act was announced at a time when oil prices continued to rise as a result of the war with Iran, during which major energy infrastructure was attacked, while the Strait of Hormuz was effectively closed.
Will the Jones Act solve the crisis of high energy prices?
According to Dalip Singh, chief global economist at the company PGIM Asset Management There are fewer than 100 ships compliant with the Jones Act, so an exemption from the law allows more international oil tankers to move fuel between U.S. ports. But Singh noted that the impact of the Jones Act suspension may be limited. This is due to "Incompatibility" Between the needs of the United States and the needs of oil refineries, as most refineries were built to process crude oil from the Middle East, while the United States mainly produces light shale oil. Singh said in a note to clients on Wednesday: "Simply put, the United States can transport fuel more easily, but it still cannot refine enough of its own production to be self-sufficient."
US criticism
Later on Wednesday, a coalition of nine US maritime labor organizations expressed "His great concern" Regarding the suspension of the Jones Act. The organizations explained in a joint statement that this broad exemption "It undermines our national security, weakens our military readiness, and gives vital maritime business to foreign ship operators". It also argued that this step would not significantly contribute to reducing Gasoline prices. The labor organizations added: "It has been clearly established that the main factor influencing gasoline prices remains the global cost of crude oil, and multiple analyzes show that the cost of domestic shipping is only one cent per gallon.".
- For more: Follow Khaleejion 24 Arabic, Khaleejion 24 English, Khaleejion 24 Live, and for social media follow us on Facebook and Twitter
