U.S. President Donald Trump is considering another suspension of the Jones Act as gasoline prices above $4 a gallon threaten to become a political liability for Republicans heading into the midterm elections. The move would reopen domestic oil and fuel shipments to cheaper foreign-flagged vessels, extending an emergency waiver Trump first imposed after the Iran war sent crude prices sharply higher in March.

The problem is that the initial waiver barely moved gasoline prices. Shipping costs represent only a fraction of what Americans pay at the pump—crude oil itself typically accounts for roughly half of the retail gasoline price, with refining, taxes, and distribution making up most of the rest—leaving the administration with limited room to reduce prices through maritime policy even as Trump intensifies pressure on ExxonMobil and Chevron over their surging profits.

Pressure on Big Oil Intensifies

Trump has stepped up his attacks on major oil companies over high gasoline prices, publicly criticizing Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) for reaping excessive profits amid elevated energy costs and global supply shortages. The president has directed the Department of Justice to investigate the industry for possible price gouging, accusing oil companies of keeping gasoline prices high even as global crude prices have declined.

The backlash followed the companies' bumper second-quarter results. Chevron's quarterly earnings surged to $12 billion, up from $2.5 billion the previous year, while ExxonMobil's profits more than doubled to $14.5 billion. The earnings figures underscored a broader dynamic across the integrated oil sector: upstream production profits benefited directly from elevated crude prices, while refining margins remained wide due to constrained domestic refining capacity—a structural bottleneck that no shipping waiver can address.

With major oil companies showing no sign of heeding Trump's warnings, extending the Jones Act waiver represents another policy lever available to the White House. The initial 60-day exemption, announced in March after oil prices spiked during the early weeks of the Middle East conflict, is set to expire on August 16. By temporarily lifting the law's strict maritime restrictions, the administration allowed foreign-flagged vessels to transport crude oil and refined petroleum products between domestic ports.

Understanding the Jones Act

The Jones Act is a federal statute requiring that all cargo transported between U.S. ports be carried on ships built in the United States, owned by American citizens, and crewed predominantly by U.S. workers. Enacted in 1920, the law has been waived approximately 40 times over its 105-year history. Former President Joe Biden also set it aside in 2021 following the Colonial Pipeline ransomware attack.

The primary purpose of the Jones Act is to maintain a steady fleet of American-owned and operated commercial vessels available to support national defense and logistics during wartime or national emergencies. It also safeguards employment for U.S. mariners and shipyard workers by blocking cheap foreign competition on domestic shipping routes. The law's impact falls hardest on non-contiguous regions—Puerto Rico, Hawaii, and Alaska—where overland alternatives do not exist and nearly all goods arrive by water, making the cost premium from using Jones Act-compliant vessels a persistent economic drag.

Arguments for Repeal

Some voices are encouraging Trump to abandon the Jones Act entirely. In a March Bloomberg Opinion piece, former New York City Mayor Michael Bloomberg argued that the temporary waiver during the Iran conflict demonstrated that the century-old shipping law is an outdated and counterproductive protectionist measure.

Bloomberg labeled the law "one of the most counterproductive protectionist measures of the last century," noting that its artificial inefficiencies unfairly penalize American consumers—costing typical families in isolated regions like Hawaii approximately $1,800 a year. He observed that the suspension helped restrain fuel prices and support domestic shipments without harming the broader industry, building a case for Congress to permanently repeal or relax the act.

Political and Industry Opposition

While energy and agricultural sectors support the waiver for helping bypass supply bottlenecks, Trump faces significant opposition to suspending the federal shipping law, including from members of his own party. Maritime industry critics warn the waiver threatens American shipbuilding and domestic seafaring jobs.

In June, House Speaker Mike Johnson and more than 50 Republican lawmakers sent a letter to the president urging him to let the Jones Act waiver expire as scheduled, arguing that it undermines American maritime jobs and national security. Data collected during the waiver period showed that roughly 95% of waiver voyages were handled by foreign operators, prompting domestic maritime groups and congressional leaders to push for a return to standard protectionist rules.

Senator Maria Cantwell and other critics argue that the Jones Act waiver has failed to lower fuel prices while creating uncertainty and instability for the U.S. maritime and shipbuilding sectors.

Minimal Impact on Prices

Evidence supports the contention that the waiver has done little to ease prices at the pump. As previously reported, the suspension of the Jones Act in March had a negligible effect on oil prices.

"It is estimated that it's going to be about 3 cents on the East Coast and it might go up on the Gulf Coast, but these changes are so small that they're overshadowed by the spikes in oil prices, and the oil prices keep going up," Usha Haley, a professor of management at Wichita State University, told Al Jazeera approximately a month after Trump suspended the Jones Act.

The political pressure to bring gasoline prices down will only intensify as the midterm elections draw closer. A late-July Politico poll found that 46% of respondents said gas prices would influence how they vote this fall. With crude prices driven largely by global supply and geopolitical factors, and domestic refining capacity running near its limits, the tools available to any administration to meaningfully lower pump prices in the short term remain constrained.

By Alex Kimani for Oilprice.com