Uncle Sam is robbing Puerto Rico blind while the neighboring Dominican Republic enjoys cheaper energy, all thanks to a century-old maritime law that’s squeezing the life out of the island’s economy.
At a Glance
- The Jones Act forces Puerto Rico to use expensive U.S.-flagged ships for importing goods, dramatically increasing energy costs compared to the Dominican Republic
- Puerto Rico pays hundreds of millions annually in inflated shipping costs, with a reported $537 million cost in 2010 alone
- A workaround using a reflagged 31-year-old French LNG carrier highlights the absurdity of the regulations
- The New York City Bar Association is calling for a permanent exemption, similar to what the U.S. Virgin Islands already enjoys
- Energy costs on the island could decrease by 8% if the Jones Act were repealed or amended
A Century-Old Maritime Shakedown
If you’ve ever wondered why Puerto Rico can’t catch an economic break, look no further than a 1920s-era protectionist law that’s bleeding the island dry. The Jones Act, a relic of World War I, mandates that goods shipped between U.S. ports must travel on vessels that are American-built, American-owned, and American-crewed. This regulatory monstrosity forces Puerto Rico, which imports 85% of its food and goods, to pay astronomical shipping fees while its Caribbean neighbor, the Dominican Republic, enjoys much cheaper imports of the same American products.
The cost difference is staggering. According to a 2012 Federal Reserve Bank report, shipping costs to Puerto Rico are dramatically higher than to nearby countries free from these constraints. For an island where nearly half the population lives in poverty, these artificially inflated prices for energy and basic necessities amount to nothing less than government-mandated suffering. The real kicker? The U.S. Virgin Islands has a permanent exemption from this maritime extortion scheme, while Puerto Rico continues to suffer.
Puerto Rico pays more for American energy than the Dominican Republic. The Jones Act inflates shipping costs and forces U.S. citizens to rely on outdated ships while our neighbors get cheaper, faster service. Repeal it. https://t.co/dwzubmv2XL
— reason (@reason) April 5, 2025
The Energy Cost Nightmare
The absurdity of this situation was recently spotlighted when Crowley Maritime had to jump through regulatory hoops by reflagging a 31-year-old, French-built LNG carrier to the U.S. flag just to legally transport American natural gas to Puerto Rico. Think about that – we have abundant, affordable American energy, but Puerto Rico can’t access it without paying a premium because of bureaucratic red tape enacted a century ago. Meanwhile, the Dominican Republic freely imports the same American LNG at market rates.
The numbers tell the story. U.S.-flag vessels have operating costs approximately 5.3 times higher than foreign-flag vessels. This isn’t free market competition – it’s government-mandated price gouging that benefits a handful of shipping companies at the expense of 3.2 million American citizens. The Puerto Rico Electric Power Authority has explicitly stated that energy costs could decrease by 8% if the Jones Act were repealed or amended. That’s real money that could be going back into the pockets of struggling Puerto Rican families.
Bipartisan Common Sense vs. Special Interests
What’s particularly infuriating is that there’s bipartisan support for exempting Puerto Rico from this outdated law. Economists across the political spectrum agree it’s harmful. The New York City Bar Association has issued a comprehensive report advocating for Puerto Rico’s exemption. Yet Congress continues to bow to the entrenched interests of a few shipping companies that benefit from this captive market. This is cronyism at its worst – sacrificing the well-being of millions to protect the profits of a few.
The arguments for maintaining the Jones Act’s chokehold on Puerto Rico don’t hold water. National security? Puerto Rico’s exemption would have minimal impact on the U.S. maritime industry, and the U.S. Virgin Islands’ exemption hasn’t compromised our defense capabilities. Economic protection? It’s achieving the exact opposite by hampering Puerto Rico’s recovery and development while enabling monopolistic practices. The reality is that this law exemplifies government overreach at its most damaging – restricting free trade, stifling competition, and inflicting economic harm on American citizens.
Time for Action
The temporary 10-day waiver granted after Hurricane Maria was woefully inadequate and demonstrated the federal government’s half-hearted approach to Puerto Rico’s challenges. What’s needed is a permanent exemption, not band-aid solutions. The fact that shipping companies can exploit this legislation to engage in price-fixing and monopolistic behavior should outrage anyone who believes in free markets and fair competition. It’s time for Congress to put the American citizens of Puerto Rico ahead of special interests and liberate the island from this regulatory burden.
The contrast between Puerto Rico and the Dominican Republic tells you everything you need to know. Two Caribbean islands, similar in size and population, yet one pays exorbitant prices for American energy while the other accesses it at market rates. This isn’t just bad policy – it’s fundamentally un-American. If we truly believe in economic freedom and fair treatment for all citizens, then the Jones Act’s application to Puerto Rico must end. It’s time to stop pretending this regulatory relic serves any purpose other than enriching a few at the expense of many.
