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Impacts of the Jones Act on U.S. Petroleum Markets

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Listed:
  • Ryan Kellogg
  • Richard L. Sweeney

Abstract

We study how the Jones Act — a 100-year-old U.S. regulation that constrains domestic waterborne shipping — affects U.S. markets for crude oil and petroleum products. We collect data on U.S. Gulf Coast and East Coast fuel prices, movements, and consumption, and we estimate domestic non-Jones shipping costs using freight rates for Gulf Coast exports. We then model counterfactual prices and product movements absent the Jones Act, allowing shippers to arbitrage price differences between the Gulf and East Coasts when they exceed transport costs. Eliminating the Jones Act would have reduced average East Coast gasoline, jet fuel, and diesel prices by $0.63, $0.80, and $0.82 per barrel, respectively, during 2018–2019, with the largest price decreases occurring in the Lower Atlantic. The Gulf Coast gasoline price would increase by $0.30 per barrel. U.S. consumers’ surplus would increase by $769 million per year, and producers’ surplus would decrease by $367 million per year.

Suggested Citation

  • Ryan Kellogg & Richard L. Sweeney, 2023. "Impacts of the Jones Act on U.S. Petroleum Markets," NBER Working Papers 31938, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31938
    Note: EEE IO ITI LE PE
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade

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