By Sam Norton.
Among the multitude of current challenges facing residents of Florida’s west coast communities hammered by back-to-back hurricanes is a widely reported shortage of gasoline. It is predictable that Jones Act opponents will use the fuel crisis spawned by these natural disasters to recycle old tropes pinning the root cause of empty fuel stations on limited transport options caused by the Jones Act. Don’t buy into that false narrative. While there are a number of factors contributing to a lack of available fuel – closed ports, insufficient delivery trucks, lack of power to operate pumps in filling stations, to name just some of those – capacity to deliver fuel by sea is not a problem at all.
Consider only OSG, one of several American owned companies capable of bringing fuel into Tampa from supply points in the Gulf of Mexico. With 4 loaded vessels scheduled to arrive in Tampa over this weekend, OSG will shortly be delivering over 27 million gallons of gasoline into the beleaguered city. And, after discharging cargoes, those same ships can be back in Tampa less than a week later with as much as another 50 million gallons of fuel. 75 million gallons of gas is enough to fill the tanks of 5 million cars – or nearly 70% of all of the registered cars trucks in the 17 Florida counties impacted by the most recent storm, Milton. And OSG is but one of several Jones Act companies that have ships ready to deliver fuel. Making even more vessels available would do nothing to refill empty fuel tanks faster. As Governor DeSantis stated on national television earlier this week, asserting that there was in fact no shortage of fuel, “This is not a supply issue; it’s a distribution issue.” Stated differently, the issue lies not upstream with the supply of fuels by sea, but rather downstream across the inland distribution supply chain.
Even more than being an issue of storm-related physical impediments to distribution, the simple fact is that when everyone wants to fill up all at once, the result is a major shock to restocking patterns. Adherence to efficient market theories championed by “free market” purists causes downstream infrastructure assets needed to supply and deliver fuel to be optimized around a normalized consumption curve. Competitive pressure to keep costs low deters investment in flex capacity to respond to sharp, short term surges in demand. And so bottlenecks arise when distribution patterns move off the center of the distribution bell curve.
Whether speaking about fuel, electricity, internet and cell phone access, or a litany of other services that we all most often take for granted, it is only when we need something that we fully understand the implications of it not being there – and, hopefully as well, the importance of those who play a role in supplying those services.
Samuel H. Norton is the president and CEO of Overseas Shipholding Group Inc. This piece was originally posted on LinkedIn on October 12.
