To the Editor:
There are five major components that make up the price of gasoline at the pump: Crude oil, transportation, refining, taxes and marketing costs.
The only one of these cost components that fluctuates to a large degree is crude oil. Crude oil price is the predominant cost component in gasoline and its cost is largely determined by fundamental supply and demand. But perception also affects the price of crude oil.
When the Biden administration limited our access to crude oil by shutting down the Keystone pipeline and restricting drilling on federal lands, the perception became that supply is limited so crude oil/gasoline prices went up immediately. This is the same as when we think bottled water or toilet paper may be limited…we go out and hoard it. That is why gasoline prices started to rise immediately after Biden took office, well before the Russia-Ukraine war.
Transportation is one cost that we can decrease. Under the 101 year-old Jones Act of 1921, all goods shipped between US ports must be on ships built in the US. It costs four times as much to build a ship in the US compared to building the same ship overseas. This extra cost gets added to the price of gasoline in Connecticut.
Ships are the only form of intra-US transport that have to be built in the US. Airplanes, trucks, railroad locomotives and cars do not have to be US-built. There are a handful of US shipyards that build large ocean going vessels. They build excellent ships but their costs are much higher due to lack of economies of scale. A US shipyard may deliver 3 ships in a good year. Korean shipyards deliver upward of 100 ships/year. It is the same as saying we must use US built cell phones, computers, televisions, or clothing. We simply cannot produce these items as cheaply as overseas manufacturers can.
The Jones Act requirement to use US-built ships costs American consumers hundreds of millions of dollars per year. The 4-5 US shipyards that benefit from this 101 year old law spend millions of dollars/year lobbying Congress to keep the US build requirement in place. All of our Connecticut Senators and Congressmen get large contributions from these shipyards,
So what to do. Write to your Congressman and Senators Blumenthal and Murphy. Tell them that they can lower your prices for gasoline by amending (not abolishing) the Jones Act to allow these US flag ships to be built overseas.
Robert Curt is a graduate of the US Merchant Marine Academy, Kings Point NY. He is former VP Marine Transportation for Mobil Oil, retired General Manager of Marine Transportation for ExxonMobil, former CEO of MLR Petroleum and Managing Director of Qatar Gas Transport Co., (Nakilat) the world’s largest owner and operator of Liquified Natural Gas tanker ships. Mr Curt resides in Westbrook CT and Fort Myers, FL