A Double Edged Sword

Jan 29, 2015, 2:18PM EST
A Double Edged Sword
Current events cut both ways.

  • Energy and the Economy

As I filled up the SUV yesterday night ($1.98 per gallon, thank you very much), the happy event also took me back to September of 2008, when, as I remember it, I also (bunkered) that same vehicle with a similar amount of fuel. Even today, I keep that receipt tacked to the bulletin board in my office. Recently, someone asked me why, and I replied simply, “I want to make sure that I always remember just how bad things can get.” Beyond the eye-popping $4.199 per gallon receipt (20.019 gallons for $84.06), this was, if you remember, in the choppy wake of the Gulf Coast hurricane that swamped all the refineries and spiked the price of gasoline by more than one dollar in less than 36 hours. The Colonial pipeline was temporarily out of service (or perhaps out of product) and I experienced my first gas lines since puberty.

 

2008 was also the year of some major surgery (I’m now twice the man I used to be), the beginning of the financial meltdown and the year the banks laid off scores of bankers. And, if you didn’t know, my wife is a banker. Today, none of those conditions exist, and yet, I’m also reminded that the financial recovery which has occurred (albeit slowly over time since then) is largely a function of the resurgence of energy production here in these United States. Finally, and as much fun as it may be to fill up the tank with half-priced regular unleaded gasoline, I also understand that the current price of crude oil has its own downstream consequences.

 

Like the economy itself, the waterfront – in particular, the domestic maritime industry and its stakeholders – is inextricably tied to energy. The building boom we see in shipyards, from oil tankers all the way to OSV’s and other support tonnage, is largely fueled by energy. Likewise, the 20 percent pullback from last year’s CapEx budgets that we see from oil majors also emanates from energy. For myself, I think there’s middle ground somewhere between $120 oil and $49 Brent. Just today, Reuters was reporting that the Royal Dutch Shell CEO was predicting long term oil prices of about $90 per barrel. I think I could live with that. You see, it is a double-edged sword.

 

  • Coffee & Containers

I normally watch the West Coast longshore labor spats with somewhat detached interest. Like the 20 tussles that precede the current disagreement, these things usually end badly with management ending up giving away too much after months of logistics nightmares, something that is immediately followed by another six months of clearing the nasty backlog caused by the slowdowns. We’ve all seen this movie before. The disputes usually begin in the lead-up to the Christmas shipping season, but I’m sure that’s just a coincidence. And this time, the protracted dispute between dock workers and management has apparently stranded hundreds of containers of coffee.

 

You simply don’t want to mess with my coffee. As cargo traffic at the Long Beach and Los Angeles approached gridlock in the past 30 days, I’m sure the blame resides somewhere in between both the port employers and the longshoremen themselves. I will leave it to you to decide which one is more to blame than the other. That said; I find it difficult to have a lot of sympathy for a well-compensated group of just 20,000 workers, many of whom pull down lucrative six-figure salaries and enjoy health and benefit packages that would be the envy of a U.S. Senator.

 

That this relatively tiny subset of workers can have such a grave impact on the economy is troubling. Beyond this, these protracted spats tend to impact the economy far longer than the slowdowns themselves. This isn’t the first time that this has happened and it won’t be the last. At some point, labor will find that an expanded Panama Canal will allow shippers, who are finally running out of patience, to look at other ports and alternatives. You see, these things cut both ways.

 

  • The Jones Act

As Senator John McCain yet again dragged out his now-tired refrain about ending the Jones Act as we know it today, I did my level best to stay out of the fray. I think I counted as many as fifteen different responses to his latest effort to attach a rider to another bill. The outcry came from Congress itself, U.S. shipyards, labor (of course), and a half dozen trade associations in between. The conversation is wearying; it travels the same old tired ground, and rarely changes anyone’s mind. At the end of the day, I knew there wasn’t much I could add that already hadn’t been said more eloquently by a more impressive list of authors. Or, so I thought.

 

Actually, one the most logical arguments for keeping the Jones Act intact in its current format came from Morton Bouchard III in November, when he declared in the pages of MarineNews, “The continuous failed attempts by companies to circumvent the Jones Act are also amazing to me. This legislation will not change. From our inception, Bouchard has invested well over five billion dollars in vessels built in the United States, crewed by United States seamen and owned by the Bouchard family. During the past few years, Bouchard has again invested well over one billion dollars in new equipment. This investment could have certainly been cheaper if built in foreign shipyards. However, consider all the jobs that were created and the taxes that Bouchard and the shipyard paid, again, in compliance with existing regulations, which gets back to my first issue in managing Bouchard - it all comes full circle.” Even Morton Bouchard says so – it cuts both ways.

 

Circling back to Senator McCain, I’m also amazed at his position, especially emanating from his experience as a naval aviator and his somewhat hawkish positions on national defense. Does he think that the next war or conflict will be happily supported by sealift flotilla of foreign registered tonnage in the absence of a U.S flag fleet? At best, it’s a foolish premise. At worst, it’s a plan that will come full circle to bite us when we least expect it. And, at the risk of putting a military analogy to work, the end of the Jones Act will most certainly be a double-edged sword. And, that’s why it will never happen. – MarPro

* * *

Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.

 
Filed under: Act, Brent, Crude, Jones, MortonBouchard
Report abuse



Bookmark this page to:Add to Faves Add to MyAOL Add to Simpy Add to Delicious Add to Live Add to Digg Add to Newsvine Add to Reddit Add to Multiply Add to Blogmarks Add to Yahoo MyWeb Add to Slashdot Add to Mister Wong Add to Spurl Add to Furl Add to Link-a-Gogo Add to Yahoo Bookmarks Add to Twitter Add to Facebook Add to Diigo Add to Mixx Add to Segnalo Add to StumbleUpon Add to Magnolia Add to Ask Add to Backflip Add to Terchnorati Add to Google Bookmarks Add to MySpace

Comments
Blog post currently doesn't have any comments.