The Trump administration has issued a 60-day waiver for the century-old Jones Act, as the White House looks for ways to reel in skyrocketing oil prices brought on by the ongoing war in Iran.

According to a March 18 statement from White House Press Secretary Karoline Leavitt, the administration says that it hopes the waiver will "mitigate short-term disruptions to the oil market," by allowing resources like oil, natural gas, fertilizer and coal "to flow freely between U.S. ports." 

But the impetus behind the suspension appears to be mostly an effort to shave a few pennies off the price of gasoline by reducing the costs of transporting it from U.S.-based refineries to U.S. consumer markets. 

Normally, under the Jones Act, all cargo moved by ship between the country's ports must be transported on a vessel made in the U.S., owned by an American company, and crewed by Americans. This makes transportation more expensive (up to four times, by some estimates) than if cargo were moved between U.S. ports by shipping companies that compete in the open market. By far the largest Jones Act refined product movements occur between various Gulf Coast ports and destinations on both coasts of Florida, according to RBN Energy. 

Originally, the Jones Act was passed in 1920 as a way to boost the U.S. shipping industry in the wake of World War I. In the decades since, it's been criticized for creating unnecessary shipping costs for domestic goods, particularly for more difficult-to-reach states like Alaska and Hawaii. The Cato Institute estimates that just 54 of the world's 7,500 tankers for moving crude oil and refined products comply with the Jones Act, while the vast majority of global shipping fleets are constructed overseas in China and South Korea. 

Waiving the act for the next two months will allow companies to use foreign ships to move their cargo between U.S. ports, although it's unclear if that will have a substantial impact on oil prices. In a March 12 blog post, Cato Institute associate director Colin Grabow said that a waiver "will not produce dramatic drops in fuel costs," given that transportation is merely one of several factors that go into determining the cost of gas at the pump.

"The current price environment reflects global supply disruptions that no domestic shipping policy can fully offset," Grabow explained, while noting it's equally wrong to claim that a waiver would do nothing at all. Rather, the question is less about the "directional impact" of Jones Act relief, and more about the actual magnitude. "That means fewer market distortions and more competitive pricing at the margin," he added.

The Seafarers International Union echoed those sentiments in a March 12 release, stating that they "do not believe a Jones Act waiver will make a difference regarding gasoline prices." The SIU also cited a recent report from Navigistics Consulting, which determined that the Jones Act's effect on gas prices amounts to less than a penny per gallon on average.

Impacts could widely vary by region as well. According to a 2022 analysis from JPMorgan Chase, waiving the Jones Act could save East Coast drivers as much as 10 cents a gallon, since the law makes it prohibitively expensive to move refined petroleum by barge from Houston to East Coast shipping hubs. That's made it so cheaper gasoline made from American crude that could go to a large market like New York has instead gone to Mexico.