The Jones Act is part of the Merchant Marine Act of 1920. It deals with coastwise trade and requires that all goods and passengers transported by water between US ports be carried on vessels that are built in the US, owned by US citizens, and crewed by US citizens. As a result, natural gas cannot be shipped economically from Houston (a major exporter) to New England (a major importer).
This is just an example of the problems created by the Jones Act and one that is particularly relevant today. Generally, the Jones Act increases consumer prices (is anyone serious about affordability?) and is particularly onerous for goods shipped from the contiguous 48 states to Hawaii, Puerto Rico, and Alaska.
The Jones Act, to a considerable degree, addresses problems and expectations that prevailed more than 100 years ago. This creates problems for investors. While President Trump recently, announced a temporary waiver of the Jones Act for cargos of vital products such as jet fuel and fertilizer, it does not address the continuing problems.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
