What is the Jones Act: Will Trump waiver lower high oil and gas prices?

As the war in the Middle East rages, a US law known as the Jones Act, or the Merchant Marine Act of 1920, comes into the spotlight.

Now, the Trump administration, under pressure from rising oil and gas prices in global markets, has temporarily waived the more than 100-year-old law.

Karoline Leavitt, the White House press secretary, announced in a post that a 60-day waiver has been issued for the Jones Act.

“President Trump’s decision to issue a 60-day Jones Act waiver is just another step to mitigate the short-term disruptions to the oil market as the U.S. military continues meeting the objectives of Operation Epic Fury,” she wrote in a post on X, formerly known as Twitter.

Earlier, the Trump administration indicated it would take such steps to curb steep energy prices. 

The Jones Act explained

The Merchant Marine Act, commonly known as the Jones Act, is the law that regulates the transport of goods from one US port to another.

Congress passed the law in 1920 after Sen. Wesley Jones of Washington State sponsored it to rebuild the merchant fleet impacted by heavy German U-boat attacks on U.S. shipping during World War 1.

In addition, the Jones Act protects U.S. shipping by requiring that cargo be carried on U.S.-built, owned, and crewed ships from one American port to another.

Will the Jones Act waiver lower the oil and gas prices?

Now that the Jones Act has been briefly waived, a question remains: will it curb soaring energy prices?

A report in The Hill cited two studies.

First, by JPMorgan, which predicted that a Jones Act waiver could lower prices by 10 cents per gallon for East Coast drivers.

The second one is the National Bureau of Economic Research working paper, released in 2023, which states that a waiver of the act could reduce the average price by 63 cents per barrel.