Lifting the Jones Act Ban on U.S. LNG Shipments

The Regulatory Transparency Project has just posted a new video in which I debate George Landrith, President of the Frontiers of Freedom Institute, about the need to reform The Merchant Marine Act of 1920, colloquially known as the Jones Act. The video is below.

The Jones Act bans shipments between U.S. ports unless they’re made on a U.S.-built, U.S.-manned, U.S.-flagged, and U.S.-owned vessel. This protects American shipyards and American sailors from foreign competition, but it raises prices for U.S. producers and consumers.

The Jones Act is particularly bad for the United States’ red-hot liquefied natural gas (LNG) markets because the U.S. doesn’t build LNG carriers so the Jones Act effectively prohibits shipment of U.S. LNG to U.S. ports. The U.S. is exporting more and more LNG to Europe and Asia and will become the world’s number one LNG exporter in the next five years, according to the International Energy Agency.

U.S. consumers in New England and elsewhere often want LNG; in times of great need, they have even skirted U.S. sanctions to import it from Russia. But as long as the Jones Act applies to LNG shipments, no U.S. consumer will ever benefit from the massive U.S. LNG boom.

I have explained how I think the Jones Act should be reformed in a piece published by the Cato Institute & a piece published by the Regulatory Transparency Project.

As I explain in the video, there are many regulations that have high costs and high benefits, but the Jones Act ban on LNG transport is an example of a regulation with high costs and no benefits. It’s a great candidate for reform.