Iranian situation drives up US fuel prices, Trump administration considers temporary waiver of Jones Act

On March 12 local time, the White House revealed that the Trump administration is studying a temporary exemption from the century-old Jones Act to ensure the smooth transportation of critical supplies such as energy and agricultural products between U.S. ports, alleviating supply tensions triggered by conflicts in the Middle East.

White House Press Secretary Caroline Levitt stated in a declaration that, for defense considerations, the U.S. is evaluating short-term exemption plans to ensure stable supplies of energy products and agricultural essentials to various U.S. ports. The final decision has not yet been made. According to informed sources, the exemption period is initially set for 30 days, and an announcement could be issued as early as that day.

This policy initiative directly addresses the surge in fuel prices and supply chain disruptions caused by shipping obstructions in the Strait of Hormuz following U.S. and Israeli actions against Iran. Data from the American Automobile Association (AAA) shows that the national average gasoline price rose to $3.60 per gallon that day, the highest since May 2024; diesel prices reached $4.89 per gallon, the highest level since December 2022.

High oil prices have become a significant political pressure for the Trump administration. The Republican Party had previously promoted "energy affordability" as a policy highlight, but continuously rising fuel prices not only weaken the policy's persuasiveness but also draw criticism from Democrats. With midterm elections approaching and voters sensitive to inflation, stabilizing energy prices has become an urgent priority.

The Jones Act, enacted in 1920, requires that cargo transportation between U.S. ports must use ships built in the U.S., flying the U.S. flag, and owned by U.S. companies. This clause significantly reduces the number of available domestic tankers. If exempted, foreign vessels could participate in fuel transportation between U.S. domestic ports, improving allocation efficiency and alleviating regional shortages.

However, industry analysts remain relatively cautious. Patrick De Haan, an analyst at GasBuddy, believes that exempting the act would have limited impact on national gasoline prices but could slow the pace of price increases in regions like the West Coast and Northeast that rely on external supplies. Overall price trends will still depend on the evolution of the situation in the Middle East.

In addition to energy, the agricultural sector is also under pressure. The American Farm Bureau Federation, the largest agricultural lobbying group in the U.S., sent a letter to Trump on March 9, calling for an exemption from the Jones Act to enhance domestic transportation capacity and prevent disruptions in strait shipping from driving up fertilizer prices.

The U.S. only temporarily exempts the Jones Act during major supply crises. The most recent application was in 2017 after Hurricanes Harvey and Maria, when the Department of Homeland Security allowed foreign-flagged vessels to transport fuel to ensure supplies to disaster-affected areas.