Colin Grabow
The Jones Act is a de facto tax on Americans trading with one another. By requiring domestic waterborne commerce to use vessels that cost far more to build and operate than their international counterparts, the law raises shipping costs. That’s a real burden given the significance of transportation in a country as vast as the United States and helps explain why relatively little freight moves by water.
Conversely, economic logic holds that lowering these costs will expand commerce, which is exactly what has happened since the Trump administration issued a Jones Act waiver for energy and fertilizer shipments in March. Freed from the law’s constraints, domestic fuel shipments have surged to unprecedented levels.
PADD 5 Receipts Nearly Set a Record in Five and a Half Months
One of the most dramatic examples of this increase has been to the West Coast, Alaska, and Hawaii, collectively known as PADD 5. According to a recent Energy Information Administration analysis, waterborne shipments of crude oil and petroleum products from the Gulf Coast to PADD 5 in April and May 2026 were more than four times their level in the same months of 2025. April’s volume was more than double the previous monthly record, and shipments remained elevated in May.
That increase has been sustained. US Maritime Administration (MARAD) data show that in less than six months, waiver shipments have already exceeded the Jones Act fleet’s annual total in every year from 2000 through 2025, with one exception. Only 2024 remains narrowly ahead (by 2.2 percent), and it appears on the verge of being surpassed.
Equally notable is the composition of these movements. From 2021 through February 2026, renewable diesel accounted for 96 percent of PADD 5 shipment volumes. In contrast, the waiver has seen a diverse set of cargoes. Some comparisons illustrate the scale of the change:
Jet fuel: More jet fuel has been moved to PADD 5 under the waiver than in the preceding 35 years combined (1990–2025). Gasoline blend stock and alkylate: More gasoline blending components and alkylate have been moved into PADD 5 than the Jones Act fleet moved from 2010 through 2025 combined. Finished gasoline: The waiver has seen more finished gasoline moved to the West Coast than the Jones Act fleet has moved in the last eight years combined.None of this is surprising. Prior to the Iran War, California was importing fuel from the Gulf Coast via the Bahamas as a Jones Act workaround to help meet its energy needs.
Crude Shipments Surge to the Mid-Atlantic
The increased energy flows aren’t just a West Coast story. EIA’s data show that East Coast-bound shipments topped 1.2 million barrels a day in April, which was the highest monthly figure on record and about 11 percent above anything seen pre-waiver. Crude-specific movements to mid-Atlantic refineries set their own record the following month.
MARAD data show nearly 12 million barrels of domestic crude have moved from the Gulf Coast to the East Coast under the waiver, including over 9 million barrels since May. Notably, Phillips 66 has stated that shipments under the waiver to its East Coast refinery have substituted domestic crude for imported oil, suggesting that existing Jones Act shipments are being supplemented rather than replaced. If so, 2026 could prove to be a banner year for East Coast oil movements.
These movements validate what has long been suspected. In 2017, the CEO of Overseas Shipholding Group, a major Jones Act tanker operator, admitted to the Financial Times that the law was suppressing domestic oil flows: “If there was not a Jones Act, then there probably would be more movements of crude oil from Texas to Philadelphia.” That prediction is now being borne out.
Puerto Rico Sets New Record
Perhaps nowhere better illustrates the Jones Act’s stifling effect on domestic fuel shipments than Puerto Rico. Since the waiver was issued, shipments from the US mainland to the island by foreign vessels alone have exceeded every annual total in the EIA’s Puerto Rico dataset, which dates back to 2004. A couple of fuel types deserve particular attention:
Imports of US propane under the waiver have more than doubled the combined total from 2004 to 2025. The amount of gasoline imported under the waiver (3.7 million barrels) exceeds the highest year in EIA’s dataset by 56 percent (2009, with 2.4 million barrels).New England Receives Waterborne Propane Shipment for the First Time
Like other parts of the country, New England has also absorbed growing amounts of domestic petroleum products. Under the waiver, approximately 880,000 barrels have reached the region from other PADDs, exceeding the total for 13 of the last 15 years.
But New England also has a wrinkle not reflected in the inter-PADD movement data. Last month, a French-flagged LPG tanker carried roughly 313,000 barrels of propane within PADD 1 from Marcus Hook, Pennsylvania, to Providence, Rhode Island. Before the waiver, that movement was not possible because the Jones Act fleet has no vessels of this type. Effectively embargoed from buying American propane, the region’s waterborne propane supplies previously relied on imports.
And the region’s demand for American fuel may only just be getting started. If the waiver, currently set to expire in mid-November, is renewed into the winter heating season, New England’s demand for marine-delivered heating oil and propane will likely increase.
Benefits Won’t Last Unless Congress Acts
Economists have argued for decades that the Jones Act suppresses domestic waterborne trade by making it artificially costly. Until recently, however, the evidence heavily relied on isolated data points and logical inference. The waiver now provides something far better by turning theory into observable reality, and the results are unambiguous.
Unfortunately, it could be short-lived. Implemented in the wake of a severe energy market disruption, the waiver is temporary and will eventually lapse. To avoid regressing to the pre-waiver status quo, Congress must act. Repealing the law would be ideal. But even merely reforming it, such as by removing its prohibition on foreign-built vessels (a requirement not imposed on any other form of domestic transportation), would bring a measure of sanity to domestic shipping costs.
Absent such action, newly revitalized domestic supply chains will unravel, and costs will rise to the detriment of American businesses and consumers alike.
