Few laws have managed to hobble America’s energy potential as thoroughly — and quietly — as the Jones Act. Enacted in 1920, the law restricts domestic water transportation to vessels that are built and registered in the United States. While originally justified on national security grounds, the Jones Act now functions as a protectionist anchor dragging down the nation’s energy sector. With sky-high shipping costs, limited vessel availability, and perverse incentives to import foreign fuel over American energy, the Jones Act isn’t protecting U.S. interests — it’s undermining them.

Start with cost. Operating a U.S.-flagged ship is roughly four times as expensive as an internationally flagged one, largely due to costlier labor, as well as tariffs and aging vessels that drive up repair and maintenance expenses. But the pain doesn’t end there. Building ships in the United States is similarly uneconomical, with U.S.-built tankers costing at least four times more than those constructed in U.S. ally South Korea.

There also aren’t that many of them (small wonder given their expense). Of the world’s more than 8,000 oil and gas tankers, the Jones Act permits fewer than 60 to move energy within the world’s largest economy.

Unsurprisingly, this all adds up to some very costly shipping. In 2017, the CEO of a Jones Act shipping firm candidly acknowledged that U.S. tankers are three to four times more expensive than their foreign counterparts. And that might be on the low side. Earlier this year, the cost of chartering a Jones Act product tanker was reportedly an order of magnitude greater than an internationally-flagged ship, at approximately $90,000 per day versus just $9,000 per day.

Those sky-high rates inevitably translate into higher energy costs. For example, in the first five months of 2025, the cost of shipping fuel from Texas to Florida was placed at $3.29 per barrel on Jones Act-compliant ships. Yet two economists have calculated that internationally-flagged vessels could do the job for just $1.23 per barrel. With 276 million barrels of fuel shipped from the Gulf Coast to the Lower Atlantic last year, that difference adds up to more than $550 million in additional costs — in just one year.

And that’s just the law’s direct costs. Its indirect and opportunity costs may be even worse.

Highlighting the looming closure of a California refinery, a 2024 Los Angeles Times article explained that gasoline once refined in-state was set to be replaced by imports from sources as distant as South Korea, the Middle East, and the Netherlands. Despite being closer and abundant in supply, the Gulf Coast was deemed an unlikely source due to high Jones Act shipping costs.

Incredibly, the Jones Act often makes it more economical to import fuel from far-flung locations than to move it within the United States.

This phenomenon isn’t new. In 2022, the Philadelphia Inquirer reported that a local refinery was importing nearly one-third of its crude oil from Russia, even though similar grades were available domestically. So why import? The article provides a clue: the added cost of U.S.-flagged shipping.

Meanwhile, in some cases, the Jones Act makes the transport of domestic energy not just more expensive but flatly impossible. A lack of Jones Act-compliant liquefied natural gas tankers means that New England cannot import American LNG, even during winter fuel crises. Hawaii, meanwhile, imports propane from as far away as West Africa — and Puerto Rico from Chile — because there are no compliant ships to transport it from the mainland.

And what do Americans get in return for these massive costs and missed opportunities? Not much. The law’s original intent—to sustain a robust U.S. maritime industry—has been an abject failure. In 2024, the U.S. ranked 19th in global shipbuilding output, accounting for a paltry 0.04 percent of the world’s total. More relevant for the energy sector, no tankers have been built in the United States since 2017.

One bright spot offers a glimpse of what a smarter approach could look like. Thanks to a 1996 Jones Act exemption, Puerto Rico has recently begun purchasing LNG from Texas using a U.S.-flagged, foreign-built LNG carrier that qualifies because it was constructed prior to the exemption’s enactment. Though the 1994-built vessel is aging and expensive to operate, its downsides are outweighed by the savings realized through the ability to source U.S. energy.

Now imagine the possibilities if the United States was unshackled from the Jones Act entirely.

For decades, American energy advocates rallied around the slogan, “Drill, baby, drill.” But drilling isn’t enough. Until the Jones Act is eliminated so that Americans can efficiently transport their energy resources, production gains will be undercut by bottlenecks and inflated costs. To truly unlock America’s energy sector potential, a new rallying cry is needed: “Repeal, baby, repeal.”