US Oil Shipping Row Continues

US – Following our report last month telling how the Jones Act was cited by the Energy Information Administration (EIA) as costing parts of the US oil industry ‘two or three times’ the amount foreign flagged vessels would, there has been a strong response from the American Maritime Partnership (AMP) which represent US owned and operated ships. The situation arose following the EIA’s own report into the possible closure of a Northeast refinery later this year.

The world’s oldest continuously operating petroleum refinery, situated in Philadelphia and currently owned by Sunoco may be closed within weeks if a buyer is not found. This would potentially create a virtual monopoly for a couple of other producers and analysts almost universally agree that East Coast petrol costs will rise, partially as a result of increased transport costs.

In written testimony to the U.S. Congress’ Joint Economic Committee, the American Maritime Partnership (AMP) criticised the report which indicated that American tank vessels may be in short supply. Since the issuance of the original report, the AMP says the EIA has conceded that it missed counting about 270 tank vessels, including large articulated tug barges, but has refused to change its conclusions.

EIA’s assessment came in a February 2012 report titled Potential Impacts of Reductions in Refinery Activity on Northeast Petroleum Markets. That report counted only American tankers and not tank barges, thereby missing about 50 percent of American tank vessel capacity, a “substantial error,” AMP testified. AMP told the Committee that ample American tank vessel capacity exists to transport any additional petroleum product. The AMP testimony (available in full HERE) runs:

“Remarkably, EIA now finds itself taking the position that even though it failed to count approximately 50 percent of the American tank vessel capacity, its original conclusion has not changed. More recently, EIA has said that ‘there may be no way to address [our] concerns’ and that ‘assessing the degree of impact may not be possible.’

“We are deeply disappointed that EIA made no attempt to speak to industry officials before issuing its original report and now refuses to alter its original erroneous conclusion. To our amazement, the original study with vessel numbers that even EIA admits are blatantly wrong remains prominently displayed on the EIA website.”

Despite maintaining their members have the capacity to handle the increased amount of product which might result from the closure, the AMP notably failed to comment on the EIA’s accusations that the compulsory use of US registered, owned and crewed ships causes excessive costs for shippers.