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.
