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 Oil Pollution Act of 1990 Crude Oil Product Substituted Services Oil Pollution Act of 1990 Politics/Public Policy

Supply Tankers: Crude Oil Tankers: Product Barges 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 Other Extreme Higher Probability 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