> On Wednesday, the administration announced it would release 172 million barrels of crude from the Strategic Petroleum Reserve.
The total reserve is 415 M barrels [1], so this is 41% of the reserve!! And refineries use about 16.5 M barrels per day [2], so if refineries used _only_ this reserve oil, it would keep them busy for 11 days. Of course they aren't _only_ using the reserve oil. I'm sure it will still have an effect, but I think it's a shorter-term solution than it first appears. I don't think this will ease prices for more than a couple months. Would be happy to be corrected if I'm mistaken about some of this.
Edit: I guess that's why they're suspending the jones act, as a longer-term solution. But the article says the Jones act will only save "pennies per gallon, not dimes per gallon", so that also doesn't seem to really do much :/
Yes, some directly via the LHWCA fed law and some indirect via labor union contracts with port associations that rent from the gov port authorities. Ultimately it's such a powerful union that often US presidents take part in the negotiations.
The recently negotiated (nation-wide) deal:
In the deal, the union holds on to existing contract language that protects against certain types of automation, and has won guaranteed jobs where partial automation is put in place.
Port employers will still be blocked from implementing “fully automated” port technology: the employers cannot implement equipment that is “devoid of human interaction.” And the union and the employers have to agree on implementing any new technology; if they cannot agree, the question gets sent to arbitration.
This language prevents East and Gulf Coast port employers from implementing the more extreme forms of automation seen in other parts of the world, including the Long Beach Container Terminal, in Southern California, where autonomous trucks and cranes entirely replace human operators.
These ports could buy the union's vote if it was important to them by giving existing workers some equity in the system that is intended to replace them.
The ILWU controls labor at all west coast ports, including LALB, which is responsible for a majority of consumer imports from the Pacific. It has bargained effectively to block developing container handling automation systems.
In this case, Trump is the "worst person you know," but he's doing something that a lot of people across the left [¹] and right [²] political spectrums have wanted to do for years by repealing (edit: suspending) the Jones Act.
[¹] Free trade dems, Clintonite think tankers, third-way corporatists, the self-styled "neoliberal" dems, abundance dems, etc. Not all dems support doing away with it because in theory that hurts the maritime unions.
[²] Much broader support on the right because it maps onto the free market and anti-regulation ideologies.
i'm confused by your footnotes, because in the first one you clarify you mean right-wingers and "free market" fanatics and then seemingly restating it in your second footnote while presenting it as a separate group haha
> Free trade dems, Clintonite think tankers, third-way corporatists, the self-styled "neoliberal" dems, abundance dems, etc.
These are all very much part of the democrat coalition, i.e. the "left" on the US political spectrum. It's not the entire democrat coalition, but they are a large part of it. I'd call them centrist for sure, but certainly not right wing.
Again we're talking about US politics here, i.e. left is the democrat coalition and right is the republican coalition. You'd have to be a very online blue sky user to call e.g. abundance dems anywhere near the right in the US.
With deference to What’s Going on With Shipping[1], the Jones Act isn’t really the problem. The entire incentive structure and industry crumbled well after it was enacted.
[1] https://youtu.be/qWKz3psejb0?si=5QJd5HQ3W1IrSJ7F
I did not expect there to be any bright spots but I hope this turns into one of those things (like the 2002 AUMF) that just lasts so long we see benefits from it and eventually kill the underlying blockers.
Replacing the Jones Act permanently with aggressive subsidies for US shipyards is one of the most important policy interventions available for multiple coastal economic concerns, and has been for decades. Basically everyone agrees that it is completely broken.
That's the goal. The Jones Act guarantees a lot of American jobs and those workers are expensive. This allows US port-to-port shipping at much lower prices.
Jones act also guarantee lack of competition between shipyards. When companies MUST buy from you, there is no pressure to improve and you can set prices as you like.
Now US shipbuilding has been shielded from competition for so long, that any kind of permanent repeal of Jones act will mean instant bankruptcy of US ship builders. Similar to what happened in Eastern Europe after 1989. That shock of not being shielded by iron curtain from competition has caused implosion of whole industries.
US shipbuilding basically doesn't exist as it is. Jones Act was the only thing (other than Navy contracts) keeping it on pathetic life support. The only possible (poor) case you could make is that it kept enough facilities and workers barely functional enough so you could mothball excess production and surge it if needed. I would eat my hat if we could surge production to anything meaningful today even if it meant survival of the nation.
Not that it did a great job, so I don't think it's going to be a huge loss on the shipbuilding front either way. The defense budget will simply pick up the subsidization slack, or we're be even more unable to field a Navy in the future. Likely both.
What will be interesting is how folks think they are going to be able to keep a merchant marine floating on the water? Are a bunch of US shipping companies going to start up, buy boats from Asia, and start employing American crews with American flagged vessels? Doubtful.
But again - Jones Act didn't really keep those goals going either way. I just hope it's replaced with something other than thoughts and prayers. There is absolutely a strong case to be made that shipping prices can justifiably be higher and paid for by the American consumer so that we can have a robust and independent merchant marine fleet only the US can control. I don't know how we get there, but I do know without it there is no such thing as sovereignty.
Ehh, doesn't this just merely rock the boat for a few years before the same uncompetitive pattern equilibriates in the expanded market? Makes no sense to me why say the subset of the earths economy within the iron curtain is say a constrained market lacking competition, but the subset of the universe's economy that takes place on the finite confines of planet earth isn't.
The problem with Iron curtain has been that you were not allowed to import stuff from the West unless you were specifically permitted to (i.e. military purposes). The ideology of Eastern block was to employ everyone, that caused low automation demand which caused high prices for goods. Furthermore lack of quality processes caused that products were expensive and also garbage. So after iron curtain fell you can buy cheap garbage from the east or expensive quality goods from the west.
That compounded with USSR imploding (losing market) and management of communist companies not being able to innovate because there was no demand for it and you got industries falling apart like Hindenburg.
Jones act has created exactly same trap. US shipbuilders are not being forced into innovation nor automation (so they can reduce labor costs) because they don't need to. And now with China eclipsing them 200 times, Jones act can't be repelled
Why are chinese shipbuilders incentivized to compete with eachother while US shipbuilders are not incentivized to compete with eachother? The answer is probably due to cartel behavior on the part of the american shipbuilders, which tends to happen in any industry that has coalesced into few enough players to get into a conference call. If the chinese are still innovating I would say it is because they are merely early in the inevitable march capitalism takes from smallholder to largeholder based industry. I would expect after several decades of mergers and acquisitions that the chinese shipbuilding industry begins to behave a lot like the American shipbuilding industry today, if they haven't already begun to do so.
> Why are chinese shipbuilders incentivized to compete with eachother while US shipbuilders are not incentivized to compete with eachother?
Chinese, Korean and Japanese shipyards compete in the global market. Construction Physics has done an excellent series of write-ups on the technological leaps America shipyards didn’t have to invest in because they were guaranteed their tiny pie.
Jones Act didn't kill American Shipbuilding, cost of American worker did.
However, whole reason for Jones Act is attempt to protect the American Merchant Marine. If you can't move things via water in wartime, you don't have an empire.
> Jones Act didn't kill American Shipbuilding, cost of American worker did
This has been studied to death. European shipyards have similar labor costs to a lot of America. They still build cheaper ships faster than we do. Same for Korea.
> If you can't move things via water in wartime, you don't have an empire
And yet here we are, entirely dependent on foreign shipyards for basically any meaningful production.
The Jones Act killed American shipping. It makes our shipyards uncompetitive. And it makes our waterways too expensive to ply because the only things one can legally float on them are uncompetitive, expensive ships.
>This has been studied to death. European shipyards have similar labor costs to a lot of America. They still build cheaper ships faster than we do. Same for Korea.
Europeans provide direct subsidy compared to American subsidy of just requiring certain ships to be built in America. Also, looking at recent trends, Europe has fallen out of favor as well with rise of Japan/Korea/China (https://cepr.org/voxeu/columns/industrial-policy-lessons-shi...)
Also worth noting that Japan/Korea/China HEAVILY subsidize their ship building as well.
>And yet here we are, entirely dependent on foreign shipyards for basically any meaningful production.
Sure, because despite the subsidizes, economics was always going to make US ships unattractive.
>The Jones Act killed American shipping.
There is zero evidence that this did it because all evidence says if you repealed it, all shippers would just buy Chinese ships, flag them under flag of convenience and staff them all with overseas worker where they make 2000USD/yr.
> There is zero evidence that this did it because all evidence says if you repealed it, all shippers would just buy Chinese ships, flag them under flag of convenience and staff them all with overseas worker where they make 2000USD/yr.
You are both right, one in the long term, the other in the short term. The Jones act protected US shipbuilders from competition over a long term. Repealing it would expose them to extreme competition in the short term, when they suddenly need to compete with other shipyards on the open market.
There's probably no clean solution here. Repealing now would shake up the us market, some shipyards might close, others might scramble to catch up.
The thing is, if you wait 'till next year, it'll be worse. And the year after that even worse.
Meanwhile, compare eg the Netherlands with very high wages, punching far above its weight with Heerema, Mammoet, Damen, IHC, Boskalis, Van Oord, Allseas, Smit, and more. It's (mostly) illegal to operate their equipment in the US. Which makes all sorts of things more expensive than it should be. And american companies don't need to compete, don't need to even consider building heavy engineering hardware. The current situation is lose-lose.
it didn't kill ship building, but it did shipping by ship within the US.
the US still ends up without a merchant marine, at least compared to if it di have ships moving between US ports and not just arriving at/leaving from US ports
> If you can't move things via water in wartime, you don't have an empire.
Exactly, the feeble American shipbuilding industry has been an existential risk waiting to explode for a generation. But corruption and profits speak louder than national security here.
The Jones Act guarantees very few American jobs because the greater economy has chosen to just bypass/forgo nearly all of the things it touches, rather than pay for Jones Act Compliant ships.
> Section 27 of the Merchant Marine Act is known as the Jones Act and deals with cabotage (coastwise trade). It requires that all goods transported by water between U.S. ports be carried on ships that have been constructed in the United States and that fly the U.S. flag, are owned by U.S. citizens, and are crewed by U.S. citizens and U.S. permanent residents
I think this is bad strategic precedent for the USA, to save few bucks now. I believe in the Jones Acts original purpose, to protect the US Merchant Marine , for that industry's necessity during wartime
> On Wednesday, the administration announced it would release 172 million barrels of crude from the Strategic Petroleum Reserve.
The total reserve is 415 M barrels [1], so this is 41% of the reserve!! And refineries use about 16.5 M barrels per day [2], so if refineries used _only_ this reserve oil, it would keep them busy for 11 days. Of course they aren't _only_ using the reserve oil. I'm sure it will still have an effect, but I think it's a shorter-term solution than it first appears. I don't think this will ease prices for more than a couple months. Would be happy to be corrected if I'm mistaken about some of this.
Edit: I guess that's why they're suspending the jones act, as a longer-term solution. But the article says the Jones act will only save "pennies per gallon, not dimes per gallon", so that also doesn't seem to really do much :/
[1] https://www.spr.doe.gov/dir/dir.html
[2] https://www.afpm.org/newsroom/blog/how-much-oil-does-united-...
Really crazy to think that starting a war across the world is the best way to break a union. Never imagined that.
Amazing, never thought it would happen.
Ridiculous to have laws that unfairly protect dead industries. Dockworkers next please so we can have automated container unloading.
what do you mean here? are dock workers legally protected from automarion?
Yes, some directly via the LHWCA fed law and some indirect via labor union contracts with port associations that rent from the gov port authorities. Ultimately it's such a powerful union that often US presidents take part in the negotiations.
The recently negotiated (nation-wide) deal:
In the deal, the union holds on to existing contract language that protects against certain types of automation, and has won guaranteed jobs where partial automation is put in place.
Port employers will still be blocked from implementing “fully automated” port technology: the employers cannot implement equipment that is “devoid of human interaction.” And the union and the employers have to agree on implementing any new technology; if they cannot agree, the question gets sent to arbitration.
This language prevents East and Gulf Coast port employers from implementing the more extreme forms of automation seen in other parts of the world, including the Long Beach Container Terminal, in Southern California, where autonomous trucks and cranes entirely replace human operators.
These ports could buy the union's vote if it was important to them by giving existing workers some equity in the system that is intended to replace them.
What’s to stop an enterprising, well funded startup from opening a fully automated port?
The ILWU controls labor at all west coast ports, including LALB, which is responsible for a majority of consumer imports from the Pacific. It has bargained effectively to block developing container handling automation systems.
“Bargained effectively”? Union boss Harold Daggett extorted the US public by threatening to “cripple the US economy’ if his demands were not met.
That is the leverage unions have. Do you expect them not to use it? The union isn't there to protect the economy, it's to protect its members.
I don’t know the legal protections around automation, but the unions virulently fight efforts to automate the industry.
You should listen to Harold Deggett, the dockworkers union boss who threatened to cripple the US economy if automation was introduced:
https://ijr.com/union-boss-willing-to-cripple-america-made-m...
He also lives in a 70,000 sqft mansion:
https://nypost.com/2024/10/02/business/harold-daggetts-spraw...
This is literally the meme of "worst guy you know made a great point" playing out in real time.
What do you mean? Can you elaborate?
Sure, this is the meme I was referencing: https://knowyourmeme.com/memes/worst-person-you-know-made-a-...
In this case, Trump is the "worst person you know," but he's doing something that a lot of people across the left [¹] and right [²] political spectrums have wanted to do for years by repealing (edit: suspending) the Jones Act.
[¹] Free trade dems, Clintonite think tankers, third-way corporatists, the self-styled "neoliberal" dems, abundance dems, etc. Not all dems support doing away with it because in theory that hurts the maritime unions.
[²] Much broader support on the right because it maps onto the free market and anti-regulation ideologies.
i'm confused by your footnotes, because in the first one you clarify you mean right-wingers and "free market" fanatics and then seemingly restating it in your second footnote while presenting it as a separate group haha
I'm not sure what you mean. The first group here?
> Free trade dems, Clintonite think tankers, third-way corporatists, the self-styled "neoliberal" dems, abundance dems, etc.
These are all very much part of the democrat coalition, i.e. the "left" on the US political spectrum. It's not the entire democrat coalition, but they are a large part of it. I'd call them centrist for sure, but certainly not right wing.
If those groups are "left" then your Overton window is fucked.
Again we're talking about US politics here, i.e. left is the democrat coalition and right is the republican coalition. You'd have to be a very online blue sky user to call e.g. abundance dems anywhere near the right in the US.
*suspending
Not repealed.
But yes.
Woops, good catch!
With deference to What’s Going on With Shipping[1], the Jones Act isn’t really the problem. The entire incentive structure and industry crumbled well after it was enacted. [1] https://youtu.be/qWKz3psejb0?si=5QJd5HQ3W1IrSJ7F
https://archive.ph/AKZ9G
God's work. Page literally jumped away from me with an ad/paywall.
I did not expect there to be any bright spots but I hope this turns into one of those things (like the 2002 AUMF) that just lasts so long we see benefits from it and eventually kill the underlying blockers.
Absolutely wonderful news for Hawaii.
Replacing the Jones Act permanently with aggressive subsidies for US shipyards is one of the most important policy interventions available for multiple coastal economic concerns, and has been for decades. Basically everyone agrees that it is completely broken.
if it works, will they keep it suspend even after?
That's the goal. The Jones Act guarantees a lot of American jobs and those workers are expensive. This allows US port-to-port shipping at much lower prices.
Good for the bottom line, bad for the worker.
Jones act also guarantee lack of competition between shipyards. When companies MUST buy from you, there is no pressure to improve and you can set prices as you like.
Now US shipbuilding has been shielded from competition for so long, that any kind of permanent repeal of Jones act will mean instant bankruptcy of US ship builders. Similar to what happened in Eastern Europe after 1989. That shock of not being shielded by iron curtain from competition has caused implosion of whole industries.
US shipbuilding basically doesn't exist as it is. Jones Act was the only thing (other than Navy contracts) keeping it on pathetic life support. The only possible (poor) case you could make is that it kept enough facilities and workers barely functional enough so you could mothball excess production and surge it if needed. I would eat my hat if we could surge production to anything meaningful today even if it meant survival of the nation.
Not that it did a great job, so I don't think it's going to be a huge loss on the shipbuilding front either way. The defense budget will simply pick up the subsidization slack, or we're be even more unable to field a Navy in the future. Likely both.
What will be interesting is how folks think they are going to be able to keep a merchant marine floating on the water? Are a bunch of US shipping companies going to start up, buy boats from Asia, and start employing American crews with American flagged vessels? Doubtful.
But again - Jones Act didn't really keep those goals going either way. I just hope it's replaced with something other than thoughts and prayers. There is absolutely a strong case to be made that shipping prices can justifiably be higher and paid for by the American consumer so that we can have a robust and independent merchant marine fleet only the US can control. I don't know how we get there, but I do know without it there is no such thing as sovereignty.
Ehh, doesn't this just merely rock the boat for a few years before the same uncompetitive pattern equilibriates in the expanded market? Makes no sense to me why say the subset of the earths economy within the iron curtain is say a constrained market lacking competition, but the subset of the universe's economy that takes place on the finite confines of planet earth isn't.
Not really, China has 232 times the shipbuilding capacity of US. See: https://www.americanmanufacturing.org/blog/chinas-shipbuildi...
The problem with Iron curtain has been that you were not allowed to import stuff from the West unless you were specifically permitted to (i.e. military purposes). The ideology of Eastern block was to employ everyone, that caused low automation demand which caused high prices for goods. Furthermore lack of quality processes caused that products were expensive and also garbage. So after iron curtain fell you can buy cheap garbage from the east or expensive quality goods from the west.
That compounded with USSR imploding (losing market) and management of communist companies not being able to innovate because there was no demand for it and you got industries falling apart like Hindenburg.
Jones act has created exactly same trap. US shipbuilders are not being forced into innovation nor automation (so they can reduce labor costs) because they don't need to. And now with China eclipsing them 200 times, Jones act can't be repelled
Why are chinese shipbuilders incentivized to compete with eachother while US shipbuilders are not incentivized to compete with eachother? The answer is probably due to cartel behavior on the part of the american shipbuilders, which tends to happen in any industry that has coalesced into few enough players to get into a conference call. If the chinese are still innovating I would say it is because they are merely early in the inevitable march capitalism takes from smallholder to largeholder based industry. I would expect after several decades of mergers and acquisitions that the chinese shipbuilding industry begins to behave a lot like the American shipbuilding industry today, if they haven't already begun to do so.
> Why are chinese shipbuilders incentivized to compete with eachother while US shipbuilders are not incentivized to compete with eachother?
Chinese, Korean and Japanese shipyards compete in the global market. Construction Physics has done an excellent series of write-ups on the technological leaps America shipyards didn’t have to invest in because they were guaranteed their tiny pie.
> Good for the bottom line, bad for the worker
Bad for most workers. Good for a cabal. The Jones Act directly lead to the failure of American shipbuilding.
Say what?
Jones Act didn't kill American Shipbuilding, cost of American worker did.
However, whole reason for Jones Act is attempt to protect the American Merchant Marine. If you can't move things via water in wartime, you don't have an empire.
> Jones Act didn't kill American Shipbuilding, cost of American worker did
This has been studied to death. European shipyards have similar labor costs to a lot of America. They still build cheaper ships faster than we do. Same for Korea.
> If you can't move things via water in wartime, you don't have an empire
And yet here we are, entirely dependent on foreign shipyards for basically any meaningful production.
The Jones Act killed American shipping. It makes our shipyards uncompetitive. And it makes our waterways too expensive to ply because the only things one can legally float on them are uncompetitive, expensive ships.
>This has been studied to death. European shipyards have similar labor costs to a lot of America. They still build cheaper ships faster than we do. Same for Korea.
Europeans provide direct subsidy compared to American subsidy of just requiring certain ships to be built in America. Also, looking at recent trends, Europe has fallen out of favor as well with rise of Japan/Korea/China (https://cepr.org/voxeu/columns/industrial-policy-lessons-shi...)
Also worth noting that Japan/Korea/China HEAVILY subsidize their ship building as well.
>And yet here we are, entirely dependent on foreign shipyards for basically any meaningful production.
Sure, because despite the subsidizes, economics was always going to make US ships unattractive.
>The Jones Act killed American shipping.
There is zero evidence that this did it because all evidence says if you repealed it, all shippers would just buy Chinese ships, flag them under flag of convenience and staff them all with overseas worker where they make 2000USD/yr.
BTW, there are Congressional proposals out there now called Ships for America Act (https://garamendi.house.gov/media/press-releases/garamendi-k...)
However, they are all just handing massive bags of money to shipbuilders. My guess is you have similar opposition.
>> The Jones Act killed American shipping.
> There is zero evidence that this did it because all evidence says if you repealed it, all shippers would just buy Chinese ships, flag them under flag of convenience and staff them all with overseas worker where they make 2000USD/yr.
You are both right, one in the long term, the other in the short term. The Jones act protected US shipbuilders from competition over a long term. Repealing it would expose them to extreme competition in the short term, when they suddenly need to compete with other shipyards on the open market.
There's probably no clean solution here. Repealing now would shake up the us market, some shipyards might close, others might scramble to catch up.
The thing is, if you wait 'till next year, it'll be worse. And the year after that even worse.
Meanwhile, compare eg the Netherlands with very high wages, punching far above its weight with Heerema, Mammoet, Damen, IHC, Boskalis, Van Oord, Allseas, Smit, and more. It's (mostly) illegal to operate their equipment in the US. Which makes all sorts of things more expensive than it should be. And american companies don't need to compete, don't need to even consider building heavy engineering hardware. The current situation is lose-lose.
(random example: https://www.youtube.com/watch?v=yvicq-kvVbw Heerema Sleipnir)
it didn't kill ship building, but it did shipping by ship within the US.
the US still ends up without a merchant marine, at least compared to if it di have ships moving between US ports and not just arriving at/leaving from US ports
> If you can't move things via water in wartime, you don't have an empire.
Exactly, the feeble American shipbuilding industry has been an existential risk waiting to explode for a generation. But corruption and profits speak louder than national security here.
The Jones Act guarantees very few American jobs because the greater economy has chosen to just bypass/forgo nearly all of the things it touches, rather than pay for Jones Act Compliant ships.
Specifically, the Jones Act guarantees trucking and freight rail jobs by making it unreasonable to transport goods by water.
It destroys far more American jobs in favor of a special interest group.
It takes Congress to repeal a law. This is likely only temporary to not enforce it.
Merchant Marine Act of 1920 ("Jones Act") https://en.wikipedia.org/wiki/Merchant_Marine_Act_of_1920
> Section 27 of the Merchant Marine Act is known as the Jones Act and deals with cabotage (coastwise trade). It requires that all goods transported by water between U.S. ports be carried on ships that have been constructed in the United States and that fly the U.S. flag, are owned by U.S. citizens, and are crewed by U.S. citizens and U.S. permanent residents
I think this is bad strategic precedent for the USA, to save few bucks now. I believe in the Jones Acts original purpose, to protect the US Merchant Marine , for that industry's necessity during wartime