With pain at the pump, AMP moves to head off Jones Act waivers

With rising U.S. gas prices and uncertainty in the Strait of Hormuz, operators of U.S.-flag tankers are worried that a drawdown of the U.S. Strategic Petroleum Reserve could be accompanied by a spate of Jones Act waivers.

The American Maritime Partnership (AMP) says that, in a letter to the Departments of Homeland Security (DHS), Energy (DOE) and Transportation (DOT), it has “offered its resources to help implement new Congressional requirements that should increase the use of U.S.-flag vessels in future Strategic Petroleum Reserve (SPR) drawdowns.”

The AMP, a broad-based coalition representing U.S.-flag vessel operators and allied interests, says it was “troubled by the decisions during the last SPR drawdown to issue Jones Act waivers for foreign-flag vessels, employing foreign workers to transport oil from the SPR despite the fact U.S.-flag vessels were available to assist.”

“AMP recognizes that there may be circumstances where waivers of the Jones Act are necessary, but we want to work with the Departments to maximize the use of available American vessels, employing American workers, in the transportation of SPR oil should another drawdown occur,” it says.

Several circumstances could lead to another SPR drawdown soon, including an Iranian blockade of the Strait of Hormuz and rising U.S. gas prices. There are dozens of American vessels with millions of barrels of capacity available to transport oil, according to AMP.

Release of oil from the SPR in 2011 resulted in nearly 50 waivers of the Jones Act, allowing the transportation of the oil on foreign vessels when U.S.-flag vessels were available to assist. New Congressional law now requires DHS and DOT to comply with certain requirements to maximize the use of U.S.-flag vessels for the transportation of oil from future SPR drawdowns before Jones Act waivers are approved.

Specifically, the new law states that no waivers may be granted until DHS “takes adequate measures to ensure the use of United States flag vessels” and no waivers may be granted unless DOT has determined whether U.S.-flag vessels are capable of assisting an SPR move. DOT is now required to provide DHS with written justification for not using U.S.-flag vessels during an SPR drawdown.

To ensure that the federal government has adequate measures in place to utilize U.S.-flag vessels, the departments are statutorily required to consult with representatives of the U.S.-flag maritime industry. AMP believes that such consultations with industry should begin immediately.offered its resources to help implement new Congressional requirements that should increase the use of U.S.-flag vessels in future Strategic Petroleum Reserve (SPR) drawdowns.

February 27, 2012