WASHINGTON—With the geopolitical crisis over the Strait of Hormuz in its third month with no resolution in sight, a related crisis is creeping onto American shores: that of affordable, accessible supplies of refined oil products. Volumes of these critical fuels are already at low levels elsewhere in the world. The United States, despite its vast oil production capacity and mature domestic refining sector, will not be exempt from these secondary impacts of the Iran war indefinitely. Rather, the Trump administration should take steps to mitigate this looming supply problem, and quickly.
The most effective and immediate option is a meaningful, permanent reform of the Jones Act, which would enable smoother and faster resupply for products along both the United States’ East and West coasts from well-supplied refinery hubs on the Gulf Coast. Such a reform can retain the important original intention of the Jones Act, while enabling a more efficient response to the imminent energy supply threat at hand.
State of play in global product markets
On March 4, days after a US-Israeli joint attack instigated the present conflict, the Iranian government declared the Strait of Hormuz to be closed to commercial traffic. Markets around the world have been impacted.
Jet fuel inventories, for example, are already running short (especially in import-dependent regions) and the price of jet fuel globally has doubled since the onset of the Iran war. According to Kpler data, total jet fuel volumes on-water have fallen by more than half to 18.5 million barrels, down from 40 million barrels before the war began. Even US airlines are feeling the pressure: pricier flights, fewer routes, higher fees and deepening malaise for all travelers.
But jet fuel markets are hardly isolated in this worsening situation: gasoline, diesel, fuel oil, and a wide range of second- and third-order products made from refined crude inputs all have a similar story unfolding. In this situation, there will be a temptation among policymakers to consider extreme options, such as product restrictions or export bans—moves that, in our view, are ultimately counterproductive and profoundly disruptive to already unstable markets.
What, then, can the Trump administration do to mitigate the refined products supply crisis without inadvertently stoking the crisis further? To begin with, administration officials should immediately reform the Merchant Marine Act of 1920, commonly known as the Jones Act.
How the Jones Act reduces efficiency in the US market
The Jones Act limits the ability of US Gulf Coast refiners, which account for nearly half of US refining capacity, to export petroleum products to the United States’ Atlantic and Pacific seaboards. It does this by requiring that all goods transported by water between two US ports travel on a vessel that is US built and US owned. The original goal of the act was to support and incentivize US shipbuilding, but in practice the law creates avoidable supply vulnerabilities and costs.
The East Coast, in particular, is well positioned to benefit from an easing in Jones Act restrictions. According to Kpler data, in 2025 East Coast gasoline imports from locations other than the United States averaged 370 thousand barrels per day (kb/d), or around 12 percent of total consumption, with roughly half of this volume sourced from Europe. Since the war in Iran began, East Coast gasoline imports from outside the United States have come under pressure. Over March and April, seaborne gasoline imports were down 44 percent against year-earlier levels.
There is also evidence that East Coast seaborne gasoline imports are priced higher than they would be if the Jones Act were not in place. According to a 2023 NBER paper published by economists Ryan Kellogg and Richard Sweeney, the Jones Act raises East Coast gasoline prices by $0.63 per barrel (1.5 cents per gallon). The paper found that the combined consumer surplus gains from the elimination of the Jones Act were $769 million per year. Even when accounting for producer losses, the annual net national welfare gain would be $402 million per year.
The argument for easing Jones Act restrictions on the West Coast rests on the need for more options in moments of acute supply shortfall. The West Coast is highly reliant on crude imports from abroad. According to Kpler data, West Coast seaborne crude imports from the international market averaged 930 kb/d last year, with 25 percent of this volume sourced from the Middle East and another 40 percent from South America.
In normal times, US Gulf Coast to West Coast crude shipments make limited sense. The Panama Canal is a bottleneck, the crude grade match is poor (Gulf Coast exports skew light sweet, while California refineries are configured for medium and heavy sour), and South American producers are often better placed geographically.
However, the West Coast is structurally exposed. Geographically isolated from the rest of the country and with no crude pipeline access east of the Rockies, the region’s high import reliance is a structural vulnerability when physical crude supplies are tightened, as is the case with the Strait of Hormuz closure. This exposure is amplified by the West Coast’s limited crude storage and lack of direct pipeline connection to the US strategic petroleum reserve, which is located along the Gulf Coast.
Revamping the Jones Act for the twenty-first century
Importantly, the laudable original intent of the Jones Act need not be scuttled by a thoughtful reform effort that addresses the present crisis. A repeal or a full revamp of the Jones Act might be preferable to some stakeholders, but a more measured effort can ease the transit of refined products throughout the United States and ameliorate price impacts of current supply scarcity. What we propose instead is that the Trump administration pursue a more durable solution in the form of an Energy Security Waiver Program.
The White House has already taken some steps down this road: US President Donald Trump initially waived the requirements of the Jones Act for sixty days beginning on March 18. That extension, which would have ended on May 18, will instead be prolonged by a further ninety days until August 18. The White House has said that, as a result of the initial waiver, nine million barrels of US oil were able to reach domestic ports, and more than forty tankers were able to use the waiver to complete vital transit between US ports. According to Kpler data, East Coast transportation-related petroleum product imports from the US Gulf Coast averaged nearly 320 kb/d in April, up from 247 kb/d a year earlier.
These waivers and the extension, while certainly constructive, still leave significant uncertainty. It is unclear, for example, if subsequent waivers will follow or what their length would be. Successive ninety-day waivers are superior to sixty-day waivers, especially if they can be telegraphed well in advance of the original expiration date.
But a more durable fix is possible and, indeed, preferable. A clearer and more consistent Energy Security Waiver Program would keep the domestic shipbuilding incentive of the Jones Act in place but provide critical long-term certainty and predictability to US refiners, which already operate at close margins. Under this plan, shippers of critical refined products would be permitted to use non–Jones Act compliant vessels permanently, as long as they can certify that no alternative compliant vessel was available during that month or a comparable short timeframe. Such a certification process could be developed and approved by the US Maritime Commission (MARAD) with input from industry and other key stakeholders. MARAD would be empowered to periodically review its certification process, reassess which and how many Jones Act–compliant ships are available, and make updates to its oversight as appropriate. This approach would not require any congressional legislation or authorization, and MARAD can manage the waiver program using its existing authorities. The White House can take the lead on directing MARAD to design this program but leave the technical management and detailed oversight to experienced hands at the commission.
In this permanent fix, any available Jones Act–compliant vessel would still have pride of place and enjoy first-in-line status to transport product cargo between ports. The intent and incentive of the Jones Act, guaranteeing a market for US-built ships, would thus remain a motivator for the shipbuilding industry. To the extent that more such vessels are built, those new ships would have a guaranteed spot at the front of the pack and enjoy certain market access mandated by law.
But until that day comes, ships that are noncompliant with the Jones Act would be free to transport products (and any other similarly critical goods) between US ports. American consumers would enjoy price relief in a smoother and more liquid supply system, and the efficiency of the overall refined product market in the US would be dramatically improved.
The time to act
To be sure, making these adjustments to the Jones Act cannot resolve the underlying geopolitical challenge that has brought global and US product markets their present supply crunch. Nevertheless, there is no reason to let the opportunity for beneficial updates to the Jones Act’s application pass. The potential benefits are not just to the United States, but also to US partners and allies struggling with the same dilemma. Indeed, by improving access and liquidity of refined products for US markets, the proposed Energy Security Waiver Program would ease pressure on available supplies for Europe and Asia by reducing US demand for limited resources.