U.S. Rep. Ed Case on Wednesday criticized the two main ocean cargo companies shipping goods between the mainland U.S. and Hawaii — Matson Navigation Co. and Pasha Hawaii Transport Lines — for opposing his request to President Joe Biden to exempt Hawaii from the Jones Act for the duration of the Russia-Ukraine conflict.
The Jones Act — which is formally the Merchant Marine Act of 1920 — requires that shipping cargo between U.S. ports must be on U.S.-flagged, American-made vessels with American ownership and crews. The rationale a century ago, shortly after World War I, was the need for a strong Merchant Marine to deliver goods to nonmainland U.S. destinations.
In a livestream, Case — a Democrat who represents urban Honolulu in Congress — identified Biden’s trade ban with Russia, which supplied about a quarter of Hawaii’s crude oil, as the reason gasoline prices exceed $5 per gallon.
“It costs three to four times more to ship crude oil from the U.S. mainland to Hawaii than it does from international ports … in international tankers because of the Jones Act, which basically constrains the supply of tankers that can be utilized on the trade between the mainland and Hawaii. And as a result … we take out 25% or so of our crude oil supply that is Russian oil,” Case said.
“We’ve got to find a replacement for that supply,” he continued. “And if the only place we can go is the domestic supply that costs three or four times as much to move here, then that’s going to be an impact on us. And I believe that’s why we are seeing some of the impacts on our gas prices as we speak.”
Case has in the past introduced legislation seeking to repeal the Jones Act, which he calls “protectionist.”
He indicated economic sanctions imposed by Biden on Russia are a proper response to the “unjustified, unprovoked, unacceptable invasion of the sovereign, independent country of Ukraine” — and said he’s waiting for the White House to consider his request for the Jones Act waiver and “giving them a little time to sort it through.”
“I hope they grant it,” Case said, and added the Jones Act “disproportionately impacts us here in Hawaii, especially with our gas prices, because we have been importing almost all of our crude oil here from foreign sources.”
According to Case, domestic crude oil supplies are “adequate … to handle our own country as well as much of the rest of the world.” He said shipping prices for domestic crude on U.S.-flagged tankers have “forced” Hawaii to rely largely on foreign crude to be processed in the state’s only petroleum refinery on Oahu.
And while the Biden administration has yet to respond to Case’s request for a waiver of the century-plus-old law, Case said he’s heard back from Matson and Pasha.
“And very disappointingly, they’re mounting a full-on defense of the Jones Act overall,” he said. “And, they’re also saying, erroneously, there are plenty of tankers in the … U.S. Jones Act fleet … to be able to service the lanes between the mainland and Hawaii. And that’s just patently untrue. … There’s only about 50 of them out there, and they’re dedicated elsewhere.
“So, I’m going to go back on them in terms of their arguments, so that we are, at the end of the day, down to the fact that they’re for a limited, targeted waiver that will relieve pressure on the consumers of Hawaii on their gas prices and their other energy prices — because this also is used for electricity generation — or they just are not willing to recognize that, in this particular case, the Jones Act has very, very difficult, unique impacts on Hawaii that are not shared on the rest of the country, at all.”
The Tribune-Herald reached out to Matson and Pasha, but didn’t receive replies in time for this story.
Email John Burnett at jburnett@hawaiitribune-herald.com.
