But the prices are down so much! Why wouldn’t we extend it it’s clearly working so well!
“The Trump administration is considering extending its temporary Jones Act waiver as fuel prices remain elevated DURING the Iran war and wider global supply disruptions.”
There, fixed it for the author. It’s about as close to done as “Mission Accomplished” was for W.
What you want to bet “wider global supply disruptions” last a long time? Of course this is in line with Project 2025’s goals, 60% are complete after only one and a half years !
It’s a complete nothing burger.
i saw a list of Jones Act waiver voyages a few days ago. It’s only something like 10 domestic voyages with relatively small volumes of oil.
Not enough to have any impact on prices at the pump or tanker / Tank barge day rates.
if Trump wanted to reduce prices at the pump, that would be simple to do with price controls. Cap the domestic oil price at $80 per barrel, cap diesel and gas prices at $3, and put a limit on crude and product export volumes.
There is no good reason why Americans should be paying the oil companies international prices with windfall profits when we have plenty of domestic oil production.
There is no good reason that we in New Zealand pay international prices on our Lamb, Beef and Butter but we do. It is not something I have ever understood.
Trump announced the cost of fuel is a small price to pay. For us at the end of the supply chain its a game changer at US$8.75 a gallon from a previous $3.90 before Trump’s adventure. The pickup is coming out of the shed only when strictly necessary.
Holy shit it’s doubled since this bullshit started?
UK petrol GBP1.58/ltr
(NZD3.63/ltr : USD8.06/usg)
By what mechanism is the president allowed to cap or set the prices of goods sold by private companies?
I understand the appeal of cheap fuel but in a global economy, aren’t price controls toxic to the ideals of free market capitalism? I don’t want Trump, or any other president for that matter to take that stroll down communist lane.
Nixon ordered temporary price controls on oil in the 1970s. However, the statutes that authorized that have expired.
Nixon was accused of a lot of things ( and most of them were true), but he was never accused of being a communist.
In order for Trump to order price controls directly Congress would have to enact new legislation.
However, Trump could limit international sales of oil under the Defense Production Act (we need our oil here to refill the Strategic Petroleum Reserve for national security) which would in turn drive down the prices of gas and diesel.
The cost of domestic heating oil here in the UK has doubled since this silliness started.
So the Orange man has cost me a fair few £££££
More probably, it’s the Ayatollah, with an IRGC gun to his head.
The UK could always tap some more North Sea oil and gas instead of treating those commodities as kryptonite. Do some fracking. Burn some coal - you have heaps. Start by shunting your PM out of No. 10.
Or just suck it up and pay more.
You will thank the Orange Man before too long.
My suggestions naturally apply to my very own communist PM and his gang equally.
Whether communist, facist, Republican or Democrat, history is rife examples of the failures of this type of central planning. The whole basis and success of our capitalist system depends on the open signaling of the free market, sans interference from regulators.
This paper (and most economists and historians) lays the troubles of the 1970’s oil crisis squarely on Nixon for implementing such controls, as well as other policies which were designed to alleviate the effects of the crisis, but ended up exacerbating it.
From the paper:
While shortages were blamed on Big Oil at home and OPEC abroad, the real culprit was federal price and allocation controls. President Richard Nixon’s August 1971 declaration of a 90-day freeze of wages and prices, intended to check price inflation then running near 4 percent (one-half of 2022’s average), set the stage for a decade of public policy failure.
Frozen prices did not address the underlying cause of expansionary monetary policy. Nor did it override the market’s continually changing scarcity values. With demand artificially encouraged and supply discouraged, strife with an everyday, essential commodity resulted.
This lesson should be remembered with today’s tensions in the Middle East. Let prices rise amid global uncertainties, knowing that the cure for high prices is … high prices.
If you are picky about sources, and want to hear the same message from a Republican aligned think tank, here’s one from the CATO institute with the same conclusion:
https://www.cato.org/commentary/remembering-nixons-wage-price-controls#
and another
All that to say, while I understand that the executive and congress should have the power to take extraordinary actions in times of crisis, we should learn from the lessons of the past and not repeat them. Price controls are bad when Mayor Mamdami wants to set rent prices in New York, or when Trump wants to put his finger on the scale. They distort the effects of the free market and have unintended consequences. It has been universally panned by economists for the bad idea it is.
Which is why I won’t be surprised when Trump tries it.
In addition to Nixon using them price controls were used in WW2 to contain wartime inflation.
I remember the effects when Nixon did it. With gas prices it worked as long as the price controls were in effect, but they couldn’t be kept in effect for long because the underlying cause for the inflation went unchecked. The refiners still had to pay ever increasing prices to OPEC.
The oil companies swallowed the loss of profits for awhile. But when they decided enough was enough they leaned on Nixon to remove the price controls.
Once he did the oil companies set out to recoup their losses at the gas pump as quickly as they could get away with it. Inflation accelerated.
For those of you who don’t study history, inflation is the reason we haven’t attacked Iran directly in the last 45 years.
The worst inflation the country ever had was in the 1970s and 1980s. The trigger was an Arab-Israeli war in 1973. The West backed Israel. In retaliation, OPEC quadrupled the price of oil. Inflation shot off.
Then came the second blow: the Iranian revolution followed by the Iran/Iraq war.
The lesson was clear: war and turmoil in the Middle East, and Iran in particular, cause ruinous inflation. As bad as inflation was in the USA it was far worse in the UK, where it nearly wrecked the economy.
In the US in the 1970s inflation got as bad as 7%. In the UK it was 25%. In Australia it was 17%. The UK government had to mandate a four day work week simply because there wasn’t enough oil to keep workplaces running.
Yet another reason why countries like the UK didn’t blindly follow Trump into an Iranian war. Trump and MAGA never reckoned with the outsized damage it could cause to economies outside the USA , but European leaders did.
If Trump told the American people that an Iranian war could trigger off ten years of 7% inflation would they be happy with it?
Why would the UK or France take an action that historically caused double-digit inflation in their economies?
None of this was reckoned by the president, or the GOP-led Duma that used to be a Senate, even though the history is clear.
In spite of being such an old man, POTUS sure doesn’t seem to understand history very well. I guess his mind was focused on other things besides international events of the time…
“You know, if you’re young, and in this era, and if you have any guilt about not having gone to Vietnam, we have our own Vietnam — it’s called the dating game. Dating is like being in Vietnam. You’re the equivalent of a soldier going over to Vietnam.”
“It’s amazing, I can’t even believe it. I’ve been so lucky in terms of that whole world, it is a dangerous world out there. It’s like Vietnam, sort of. It is my personal Vietnam. I feel like a great and very brave solider,”
It’s interesting, because this thread is about the Jones act, which is the textbook definition of a protectionist, anti-free-market policy. I think there are good arguments to be made for the use of such policies and that they can be valuable to the national interest. That said, there are definite tradeoffs and such actions have to be weighed and measured carefully. What seems like a good idea in the short term can have long term negative impacts and it is difficult to see into the future and predict such outcomes.
There is an economic concept called the “cobra effect”, named after the British policy of paying for dead cobras in India, which led to people breeding them for the income, thereby increasing the population in spite of the opposite intention.
I think there is a fine balance to be struck along the edges of domestic and international policy like this. There are definitely negatives associated with the Jones Act, such as the increased cost of domestic shipping to Hawaii and Puerto Rico or overall lack of competition in the US domestic shipping sectors. However, it has ostensibly served to retain the strategic need for a somewhat self sufficient shipping industry that would have otherwise been offshored long ago. I think the Jones Act has made sense for a number of reasons, but I wonder how long those reasons can continue in our increasingly interconnected world. If our domestically protected shipyards can’t keep up with our needs anyway, was it really worth protecting them? And what will the consequences of this policy be when the dam finally breaks and the controls are finally lifted? Would we have been better off biting the bullet long ago and developing supply chains that were economically more sustainable? Of course, as a US based mariner, I am biased. We will see.
The shipyard issues of the Jones Act can be fixed by simply allowing modular sections of ships to be made in foreign countries and assembled in the USA.
There wouldn’t even need to be a change to the wording of the Jones Act. The Jones Act doesn’t define what US-built means. That’s up to CBP and the USCG.
Cars are built that way. Planes are built that way.
We make plenty of cars and planes.
It is completely bizarre that we don’t make ships that way.
That would sidestep the need to re-write the Jones Act and get a bipartisan consensus to redefine policy, but is that substantially different in practice than just building offshore? I guess it would retain some domestic trades and skills while outsourcing the bigger aspects of hull construction, but I don’t really know enough about shipbuilding to understand where the real cost savings and inefficiencies are in the US. I imagine every aspect from design to launching is more expensive.
It would be helpful to lay out what proper goals of the industry in the US are currently, and what we want to shoot for in the future. If we can agree on what those are, then we can modify the JA or write new legislation to suit. But that seems like a tall order in this polarized political climate.
The issue is, the USA isn’t producing enough ships. Which is bad in time of war.
It just costs too much to build in the USA , compared to foreign countries.
If the modules are built in Mexico and assembled in the USA the price drops.
This is exactly what we do with autos. We have a thriving auto industry. We have lots of autoworker jobs. If we built cars 100% in the USA the automobile industry would be in the weeds. But we use foreign modules and the industry thrives.
Boeing can’t find enough US workers, even though their planes use foreign built modules.
If we want to increase the number of US shipyard jobs, and increase the number of American ships built, just follow the clear history of automobile and aircraft manufacturing in the US.
It’s simple. And completely bizarre that it isn’t being done today.