Oil companies are using a Caribbean fuel trade to work around a century-old US shipping law as East Coast demand booms

• Oil companies are finding ways around a century-old US shipping law to get supplies to the East Coast, according to Reuters.
• The Jones Act requires that goods traveling between US ports must be carried by American-made ships and staffed by a US crew.

Oil companies are finding legal ways around a century-old US shipping law to get fuel to the East Coast, where demand is skyrocketing, according to data from Refinitiv compiled in a Reuters report.

With capacity nearly maxed out on the Houston-to-New Jersey Colonial Pipeline, seaborne shipments of fuel have become more attractive. But the Merchant Marine Act of 1920, also known as the Jones Act, requires that goods traveling between US ports must be carried by American-made ships and staffed by a US crew.

Now traders are increasingly transporting unfinished gasoline products from the US Gulf Coast to Buckeye Partners LP's terminal in the Bahamas, according to Reuters. Then, those supplies are blended into finished gasoline and shipped off to the US East Coast.

This trade was uncommon before Russia invaded Ukraine, and did not occur at all last year. But since March, at least eight cargoes have completed the route and then delivered fuel to ports along the Atlantic, according to Reuters. Most of the ships were chartered by BP, it noted.

Overall data also reflect the spike in fuel trade with the Bahamas. In 2021, the US sent 146,000 barrels of gasoline components to the Bahamas, whereas in May 2022 alone shipments totaled 498,000 barrels.

And through the entirety of last year, the US imported 699,000 barrels of finished gasoline from the Bahamas. So far this year, that figure is already up to 1.2 million barrels.