Trump considers waiving US ship mandate for natural gas

Bloomberg

President Donald Trump is seriously considering waiving the requirement that only US flagged vessels can move goods from American ports to Puerto Rico or energy-starved areas of the Northeast, according to people familiar with the deliberations.
The issue was debated during an Oval Office meeting, following requests from Puerto Rico and pressure from oil industry leaders to ease the nearly 100-year-old Jones Act requirements, according to three people. Although top administration officials are divided on the issue, Trump is now leaning in favour of some kind of waiver, said two of the people, who asked for anonymity to discuss the private discussions.
The move — which would be fought by US shipbuilding interests and their allies on Capitol Hill — has been promoted as essential to lower the cost of energy in Puerto Rico and ease the flow of American natural gas to the US Northeast, where there aren’t enough pipelines to deliver the product from Pennsylvania.
But even inside the Trump administration, there are fierce defenders of the Jones Act, a 1920 law requiring that vessels moving cargo between two US ports be US-built, -owned and -crewed. The law was originally designed to protect the domestic shipping industry and the country’s maritime might, and supporters argue that it’s just as essential today to ensure ships are made in the US. Any move to weaken or waive the requirements threatens the US shipbuilding industry and the jobs tied to it, they argue.

NAVARRO, CHAO
That divide was apparent during the White House meeting, where Jones Act supporters included Trump trade adviser Peter Navarro and Transportation Secretary Elaine Chao. Larry Kudlow, the director of the National Economic Council, pushed for waiving the Jones Act, three of the people said.
The White House press office did not respond to a request for comment.
Trump faces increasing pressure to relax the shipping requirements.
Puerto Rico is seeking a 10-year waiver to allow liquefied natural gas to be delivered to the island on foreign-flagged vessels.
And energy industry leaders have pressed for changes to facilitate natural gas and petroleum product shipments between US states. Among them: billionaire oil man Harold Hamm, the chairman of Continental Resources Inc. and a former Trump energy adviser. In January, Hamm complained at a Houston energy conference that the US has been forced to buy LNG from Russia because there are no Jones Act-compliant tankers to transport liquefied natural gas.

AMERICAN FIRST
Kristin Thomas, a Continental Resources spokeswoman, said the US Domestic Energy Producers Alliance, which Hamm founded, “is in favour of being able to ship US LNG to US ports,” although the group “has not waded into any issues related to Puerto Rico.”
Oil industry leaders argue that the Jones Act restrictions undermine Trump’s American “energy dominance” agenda, by encouraging imports of foreign oil and gas despite abundant supplies inside the US Russian LNG was delivered to Massachusetts last year to help supply consumers in the Northeast US. And inland oil refiners argue requirements to use US-flagged vessels boost the costs of obtaining raw crude, effectively subsidising foreign competitors.
“The Jones Act is completely contrary to the president’s energy agenda, in large measure because it encourages the importation of energy — diesel from Europe, LNG from Russia — rather than the use of energy made in America and developed and refined by American workers,” said Mike McKenna, a Republican energy strategist. “If you’re in favour of the Jones Act, you’re in favour of damaging consumers and helping very sp-ecific interests line their pockets at consumers’ expense.”