The Jones Act Is Forcing Puerto Rico to Overpay for Energy

Colin Grabow and Alfredo Carrillo ObregonPuerto Rico ’s electrical grid is (onceagain) on the brink of a  crisis. For months, companies contracted to supply liquefied natural gas (LNG) and diesel fuel that the island relies on to generate electricity havefailed to fulfill their supply commitments amidst disruptions induced by Russia ’s invasion of Ukraine. But whereas other countries facing an energy crunch have been able to turn tofuelsproduced in the United States as an alternative, Puerto Rico is instead looking to countries as distant asOman. Behind this bewildering situation is a  familiar culprit: theJones Act, a  1920 law that restricts waterborne transport within the United States to vessels that are U.S.-flagged, U.S.-built, and mostly U.S.-crewed and ‑owned.While U.S. energy production and fuel exports (most notably LNG) have grownsignificantly, Puerto Rico ’s ability to access this bounty is constricted by thehigh cost of using Jones Act‐​compliant tankers. And that’s if such ships are even available. In the case of natural gas, Jones Act‐​compliant LNG tankers arenon ‐​existent, rendering the bulk transportation of U.S. LNG to the island animpossibility. The Jones Act means that U.S. LNG can be transported by tankers to other countries but not other parts of the United States.This brings with it real costs. When Puerto Rico applied for a  10‐​year Jones Actwaiver in 2018 (eventuallydenied) to gain access to U.S. LNG, official estimate...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs