KEEPING WITH JONES ACT
Russia is the winner in the federal law on natural gas exports between U.S. ports.
The Russians are invading Boston Harbor and natural gas and diversion are their weapons of choice. Forget about elections, this is about staying warm or keeping the lights on. While an endless number of Americans are lecturing Europe to just say no to Russia’s “Nordstream 2” pipeline in the Baltic Sea, few noticed Russian tankers recently delivering natural gas to New England.
There is no doubt that the latest Russian gambit to dominate the European gas market will undermine European energy security for years to come, but the U.S. has bigger problems. The Russian tanker anchored in Boston Harbor has not only violated the spirit of U.S. sanctions, yet amazingly, nobody has asked why any state would need to actually import natural gas when it so readily abundant right here in the United States. Pennsylvania alone produces so much natural gas that it raises a key question: why would a nearby neighbor need to go all the way to Russia to keep New England residents warm?
One of the reasons is the 1920 Jones Act, a post-World War I national security undertaking, requiring that vessels moving cargo between two U.S. ports be U.S. built, owned and crewed. Initially designed to protect the domestic shipping industry and America’s maritime might, this almost hundred-year old law now serves as a sort of protectionism for a not very competitive U.S. shipbuilding industry. And therein lies the problem. The United States has not produced an LNG carrier since the 1980s and U.S. shipbuilders have shown little inclination to reverse course especially now that they could never compete with carriers built elsewhere.
Waivers of the Jones Act based on so-called economic grounds have been largely rejected, as they were again in May of this year, and that is one of the reasons why Russian gas ended up in New England. In contrast defense waivers of the Jones Act, invoked by the Pentagon are almost routine. What is truly perplexing is why this administration and many in Congress do not view U.S. energy independence just as critical for this nation’s national security as they do a strong military.
The only person who celebrated the absurdity of importing Russian gas to the world’s largest natural gas producer, is Vladimir Putin.
Much like its interference in other aspects of American life, Russia is intent on playing an outsize role in the domestic energy debate in the United States. With an economy based on the export of oil and gas, Russia views U.S. LNG exports to the European market as a direct threat to its hard currency earnings, its ability to set non-competitive pricing and its use of energy supplies as political blackmail. As such, Russia has pursued every available avenue to undercut the burgeoning U.S. energy market.
The Russian-owned RT network, a regular channel in multiple languages included in most U.S. cable packages, features a steady stream of emotional and passionate American pundits posturing about the pending environmental disaster that looms over America because of U.S. shale gas and oil production. The goal is to turn U.S. public opinion against domestic energy production. In 2014, NATO’s then Secretary General Fogh Rasmussen called out Russia for supporting environmental groups bent on opposing energy production both in the United States and Europe.
These groups have found kindred spirits among politicians in New York and New England, with their steadfast refusal to allow the building of pipelines and their hardline positions on fracking. They are patting themselves on their collective backs for being in the vanguard of the nation’s greatest environmentalists. And they do this with full knowledge that their constituents will be saddled with stratospheric utility bills and their states will continue to import gas from the one country they claim to distrust among all others.
Somewhere in between the archaic application of the Jones Act and the self-righteousness of those who would deny Americans access to U.S. produced energy, there is a clear-cut winner. Unfortunately for us, that winner is Putin, and U.S. consumers are left paying the price.