THE FUTURE OF THE JONES ACT TANK VESSEL FLEET

HENRY S. MARCUS

Research Conducted for Double-Hull Tanker Legislation:An Assessment of the Oil Pollution Act of 1990, Marine Board, 1997

Key Issues

• Supply of Tankers & Barges

• Demand– Crude Oil– Product– Substituted Services

• Oil Pollution Act of 1990

• Politics/Public Policy

Supply

• Tankers: Crude Oil– 28 Single Hull > 50K DWT (Out of 48)

19 < 25 years

• Tankers: Product– 41 Single Hull < 50K DWT (Out of 67)

20 < 25 years

• Barges– 1 Single Hull > 50K DWT (Out of 1)

1 < 25 years

– 73 Single Hull < 50K DWT (Out of 105) 56 < 25 years

Demand

• Crude Oil

– Declining Alaskan Production

– Export in U.S.-Flag Ships

– New Drilling?

• Product

– U.S. Gulf to U.S. Northeast

– Seasonal

– Pipelines

– Imports

• Lightering/Intra-port

– Barges

Impact Of Oil Pollution Act of 1990

• Construction of Double Hull Tank Vessels

• Operation of Double Hull Tank Vessels

• Retirement of Single Hull Tank Vessels:– For > 30,000 GRT: At age 23 In 2000– For 15 < 30,000 GRT: At age 25 in 2005– For 5 < 15,000 GRT: At age 25 in 2005

Impacts of OPA 90

• One Extreme– All SH Tank Vessels Replaced with DH when required

• Other Extreme– No SH Tank Vessels Replaced Due to Lack of Economic Demand

• Higher Probability– Few Additional Crude Oil Tanker Replaced

• Crunch Within 5 years

– Few (9) Product Tankers Replaced• Substitutes Used

– Barges Replaced as Needed

Public Policy Issues/Politics

• If All SH Replaced, Huge Cost

• If No Additional SH Replaced, Most of Industry Wiped Out (10 years early)

• Possible Jones Act Waivers

• Future of Jones Act

• Replacement of Tankers with Barges

• Reduction in Active Seafarers

• Role of Domestic Trade in U.S. Merchant Marine Policy