Home heating costs are rising across the country amid already rising energy costs, and the Northeast is expected to be hit the hardest this winter.
The region is particularly vulnerable due to ongoing diesel shortages and is heavily dependent on domestic heating oil. It also lacks the pipeline infrastructure of other parts of the US and therefore must rely on liquefied natural gas and other imported fuels.
But New England leaders, energy firms and experts say the 100-year-old law is contributing to the problem, and are urging the Biden administration to lift it to ease price pressures on consumers.
Months ago, New England governors suggested that the Department of Energy consider suspending the Jones Act, also known as the Merchant Marine Act of 1920, which requires that goods shipped between US ports be carried on ships built, owned and operated by Americans.
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Because of federal law, the energy-poor Northeast imports its fuel because it’s usually cheaper to do so than from energy-rich domestic regions like the Gulf of Mexico. Since Russia’s invasion of Ukraine caused energy prices to rise in Europe, the New England states are now competing more with Europe for those limited supplies on the world market.
According to Scott Lincicome, director of general economics at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, “That’s causing big problems right now.”
Lincicome told FOX Business that American-made vessels cost four to five times as much to build as their global counterparts, and there are “absolutely zero” liquid natural gas tankers that suit Jones because they are so expensive. to build such an advanced ship at home.
The federal government has issued Jones Act waivers in the past during emergencies. Former President Trump waived the Jones Act in Puerto Rico in 2017 to remove restrictions on ships providing aid to the island after it sustained extensive damage from Hurricane Maria.
Department of Homeland Security Secretary Alejandro Mayorkas authorized the ship to deliver diesel to the island in September after Hurricane Fiona after the ship floated out to sea unable to enter port due to a 100-year-old law.
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Warnings have already been issued that the US Northeast could face a state of emergency.
The general manager of Groton Electric Light in Massachusetts sounded the alarm to customers earlier this month that the electricity grid has been declining for years and that if New England experiences a “cold snap, there is a high probability of blackouts” because “this year.” worse.”
He encouraged customers to fill up their heating oil and propane tanks soon, make sure backup generators are running, and anyone burning wood or pellet stoves to stock up.
“The governor is up there and the energy companies up there are clamoring for some kind of repeal of the Jones Act because inventories are low and there’s no respite on the horizon,” Lincicome said. “So everyone is praying for a mild winter, which is a terrible way to have an energy strategy.”
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With concerns on the rise in the Northeast as the cold months begin and energy markets remain volatile, calls are growing for the Biden administration to consider easing sooner rather than later. But President Biden is a staunch supporter of the law and the unions that support it, making administrators especially reluctant to do otherwise unless forced to do so.
“They probably won’t issue any kind of pardon,” Lincicome said of the Biden administration. “Unless it’s just a crisis situation, by that time, it’s probably too late.”