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

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

Full Title: Impacts of the Jones Act on U.S. Petroleum Markets
Author(s): Ryan Kellogg and Richard L. Sweeney
Publisher(s): National Bureau of Economic Research
Publication Date: December 16, 2023
Full Text: Download Resource
Description (excerpt):

This paper studies 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. They 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. They 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.

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