Commentary: Jones Act rulings would damage economy, jobs, energy production

By Marty Durbin

More than 80 percent of voters support increased development of U.S. oil and natural gas, and it’s clear why. The average American household saved as much as $1,337 on energy costs in 2015, and drivers saved an average $550 at the pump – tangible benefits of the American energy resurgence. There’s no denying that oil and natural gas production is a powerful engine for the U.S. economy, supporting 9.8 million jobs and providing competitive advantages for our manufacturers.

Government energy policy is still catching up to our rapid emergence as the world’s leading producer and refiner of oil and natural gas. Until 2015, a ‘70s-era ban on crude exports remained in place. Even ethanol mandates set in 2007 – when policymakers assumed a future of declining production and increasing fuel imports — are outdated. But the Jones Act is especially interesting. Passed in 1920, the law requires that all merchandise shipped between U.S. points be carried on U.S.-built, owned and operated vessels.

For decades, the oil and natural gas industry has met the policy’s goals while protecting consumers from negative effects. But a new interpretation of the law could make that more difficult. Two days before President Trump’s inauguration, the U.S. Customs and Border Protection Agency (CBP) released a proposal that would make drastic changes to long-standing rulings related to the use of Jones Act vessels in offshore oil and natural gas activities.

CBP’s proposal would not only overturn more than 40 years of precedent, it would place serious limitations on the industry’s ability to safely, effectively, and economically operate – limitations that could cut jobs and reduce oil and natural gas production, according to a new report.

The report from energy consulting firm Calash projects that losses in the range of 30,000 industry-supported jobs could occur in this year alone, increasing to as many as 125,000 jobs lost by 2030 –with the Gulf region most impacted.

U.S. oil and natural gas production could see a drop in the range of 23 percent from 2017 to 2030, while cumulative GDP losses could reach $91.5 billion. Oil and natural gas development and investment in the Gulf of Mexico could take an abrupt hit, causing additional strain on consumers and businesses that depend on domestic energy resources and further imperiling our long-term national energy security.

We can’t afford these kinds of setbacks. Maintaining U.S. energy leadership – and the wide range of economic and national security benefits it provides – requires forward-thinking, 21st century energy strategy.

CBP’s rushed proposal is an unforced error, and should be withdrawn.

 

Marty Durbin is executive vice president and chief strategy officer at the American Petroleum Institute.

SHOW MORE