Federal and industry figures indicate that the March suspension of the Jones Act - which ordinarily requires vessels transporting goods between U.S. ports to be U.S.-built, -owned and -crewed - has, to date, produced only modest reductions in gasoline costs for American motorists. The administration issued the exemption to allow foreign-flagged ships to carry crude and refined products between U.S. ports, chiefly to move fuel from Gulf Coast refineries to fuel-deficit East and West Coast markets.
The waiver is the largest suspension of the law in its history and was intended to ease transport bottlenecks and cut delivery times. However, Reuters analysis of federal shipment records and market data suggests two principal reasons why the measure has not translated into meaningful price relief: elevated charter rates for international tankers and the relatively small volumes that have moved under the exemption so far.
From the time the waiver took effect through its first two months, refiners including Valero and Phillips 66 used the exemption roughly 50 times, federal data show. Those voyages transported about 2.6 million barrels of crude and 7.5 million barrels of gasoline, diesel and jet fuel. Although notable, those totals remain a fraction of U.S. daily consumption levels.
Industry observers attribute high freight costs to limited access to international tonnage. Many vessels were constrained by operations in and around the Strait of Hormuz, elevating demand for international ships and pushing charter rates well above typical levels. "Freight rates are much, much higher than they typically would be," said Ryan Kellogg, an energy policy professor at the University of Chicago. "International vessels were just really hard to get."
That dynamic diminished potential pump-price savings. Price-reporting firm Argus estimated that shipping on an international tanker from the U.S. Gulf Coast to the West Coast under the waiver would have reduced transport costs by about 6.6 cents per gallon compared with a Jones Act tanker - roughly 1% of California’s current pump prices. On the East Coast, by contrast, unusually high demand for ships sailing to Asia made it cheaper in many cases to rely on Jones Act vessels rather than foreign-flagged alternatives.
The administration has pushed back on assertions that the waiver has underdelivered. White House officials said data compiled since the initial exemption demonstrate that significantly more supply was able to reach U.S. ports faster. Two administration sources told Reuters that officials are satisfied with the waiver’s effects and have communicated to the oil industry that future extensions are possible if conditions warrant.
Critics of the waiver highlight its limited impact on retail prices and question its broader market consequences. Jennifer Carpenter, president of the pro-Jones Act group American Maritime Partnership, said: "This waiver is not delivering on what (Trump) was told it would do: lower prices at the pump, and materially increase the flow of product across the country." Supporters of repealing or relaxing the law argue the waiver signals unmet demand for additional tanker capacity.
Colin Grabow of the Cato Institute noted that the fact waivers were used about 50 times indicates the exemption was the preferred option in those cases, and that without it, firms would have had to rely on more expensive alternatives. "The fact that waivers have been used 50 times to move energy suggests that this was the best option, and if this didn’t exist, a more expensive, costlier option would have had to be used," he said.
Geography shaped where the foreign tankers provided the most relief. California - the largest U.S. market for imported oil and fuel - received more than 60% of gasoline and blendstock cargoes moved under the waiver, receiving about 3 million barrels in total. That equates to roughly 2.1 million gallons per day, which is only about 6% of California’s estimated daily consumption of 36 million gallons.
Foreign-flagged vessels also carried product to Alaska, Florida, South Carolina and Oregon, with combined shipments under the waiver averaging roughly 84,000 barrels per day. Those volumes are small next to U.S. nationwide demand: about 8.75 million barrels consumed per day.
Beyond immediate price impacts, the waiver appears to have altered maritime deployment patterns in ways that raise questions about domestic tanker availability. Industry sources reported that at least one U.S. tanker shipped Alaskan crude to South Korea in April - its first recorded international voyage since 2014. Separately, two sources said Valero sought a Jones Act tanker to move fuel to Mexico. Industry participants warned that if foreign vessels can undercut domestic routes, some U.S. tankers may pursue more profitable international work, potentially tightening the U.S. Jones Act fleet for domestic runs.
Tax treatment of voyages conducted under the waiver also surfaced as a deterrent. One shipping source said uncertainty over tax outcomes for waiver voyages discouraged firms from chartering foreign tankers for U.S. coastal routes.
Market conditions may change. As international tanker rates decline from recent highs, industry experts expect more companies to make use of the waiver in coming weeks. That could increase volumes moved under the exemption, but whether that translates into substantial and sustained relief at the pump will depend on freight market developments and the scale of shipments relative to U.S. consumption.
Key points
- Volumes moved under the Jones Act waiver were small relative to U.S. consumption - about 2.6 million barrels of crude and 7.5 million barrels of refined products in the first two months, and roughly 84,000 barrels per day combined.
- High freight rates and limited availability of international tankers - in part because many ships were engaged near the Strait of Hormuz - reduced the waiver’s ability to lower pump prices significantly.
- Market shifts tied to the waiver could affect the domestic Jones Act tanker pool if U.S. vessels seek more international work, potentially tightening domestic availability for internal coastal shipments.
Risks and uncertainties
- Freight market volatility - elevated international charter rates have limited cost savings from the waiver, and persistent rate fluctuations will determine future uptake of foreign tonnage; this affects energy logistics and refinery distribution networks.
- Market share and fleet redeployment - foreign competition on U.S. coastal routes could incentivize domestic tankers to pursue international voyages, risking tighter domestic tanker supply and affecting sectors reliant on timely coastal fuel deliveries.
- Regulatory and tax ambiguity - uncertainty over tax treatment of waiver voyages has discouraged some chartering decisions, introducing a policy and financial risk that could suppress the waiver’s effectiveness.