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Union-backed federal law helped create the Northeast propane shortage

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Michael Bastasch Contributor
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The Northeastern U.S. is struggling to keep the heat on during this year’s frigid winter which has caused a propane shortage, but a union-supported federal law is preventing abundant domestic propane supplies from getting to where consumers need it the most.

The 94-year-old Jones Act has prevented Northeasterners from getting cheap, abundant propane from Texas, instead forcing them to pay more than $100 a metric ton for propane from Europe — 4,000 miles away.

The Jones Act makes it illegal for non-U.S. ships from transporting goods between U.S. ports, and is backed by labor unions, shipyards and shipowners. The law’s proponents argue that it’s necessary for national security and economic reasons.

But try telling that to a New Englander who will spend an additional $206 more this winter for fuel than last winter, according to federal government data.

The country’s lagging pipeline infrastructure is full and there are no eligible U.S. ships to get fuel to the beleaguered Northeast — which is expected to continue seeing frigid winter conditions throughout March.

“It’s kind of a crazy thing, where we’re sending ships to Europe and then in return, at some point in time, Europe is sending propane cargoes back to us,” Peter Fasullo, an energy consultant with EnVantage Inc. told Bloomberg. “You have to think, isn’t there a more efficient way of doing this?”

Bloomberg reports that a ton of propane cost about $673 in Houston on February 24th of this year. If the Jones Act were repealed, the propane could be transported to Philadelphia for only $18 a ton. Propane was about $785 in Northwest Europe and would only cost $28 a ton to send to Philadelphia. This would cost about $121 a ton — 18 percent more than propane shipped from Texas.

“We were shipping propane out of the south side and bringing it in on the north side. It’s ridiculous,” Bill Smith, who runs a fuel trading business in Delaware, told Bloomberg. “The Jones Act, which is the most stupid law ever on books, was good for its time, but it’s a little out of date.”

The International Energy Agency estimated that repealing the Jones Act would lower gasoline prices by up to 15 cents a gallon due to the increased supply of ships able to transport gas between U.S. ports.

“The Jones Act supports U.S.-flag vessel operators, U.S. mariners, and U.S. shipyards vital to this country’s economic and national security,” Kim Strong, spokeswoman for the pro-Jones Act Maritime Administration, told Bloomberg.

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