Impacts of the Jones Act on U.S. Petroleum Markets

Ryan Kellogg and Richard Sweeney

No 31938, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how the Jones Act — a 100-year-old U.S. regulation that constrains domestic waterborne shipping — affects U.S. markets for crude oil and petroleum products. We collect data on U.S. Gulf Coast and East Coast fuel prices, movements, and consumption, and we estimate domestic non-Jones shipping costs using freight rates for Gulf Coast exports. We then model counterfactual prices and product movements absent the Jones Act, allowing shippers to arbitrage price differences between the Gulf and East Coasts when they exceed transport costs. Eliminating the Jones Act would have reduced average East Coast gasoline, jet fuel, and diesel prices by $0.63, $0.80, and $0.82 per barrel, respectively, during 2018–2019, with the largest price decreases occurring in the Lower Atlantic. The Gulf Coast gasoline price would increase by $0.30 per barrel. U.S. consumers’ surplus would increase by $769 million per year, and producers’ surplus would decrease by $367 million per year.

JEL-codes: F13 K33 L72 Q37 (search for similar items in EconPapers)
Date: 2023-12
New Economics Papers: this item is included in nep-ene, nep-ind and nep-tre
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