Southwest Airlines Used Jones Act Waiver to Bring Texas Jet Fuel to West Coast Market
Southwest Airlines turned to a Jones Act waiver in May to ship Texas jet fuel into Southern California amid historically tight West Coast supplies and surging prices, according to publicly available data and a company executive interview on CNBC this week.
Jones Act waiver tracking data published by the CATO Institute shows a jet fuel cargo was loaded in Houston on May 9 and arrived in Los Angeles-Long Beach on May 28.
The Dallas-based airline chartered a tanker carrying jet fuel that departed Houston ports, sailed through the Panama Canal and docked in Los Angeles on May 28, Southwest CFO Tom Doxey said in the CNBC interview.
“It brought like a week’s supply to the West Coast at a time when supply was most constricted,” Doxey stated. “When (supply) was most at risk.”
The voyage was a first for the airline, he added, with Southwest leaning on the Jones Act waiver to supply the region after the onset of the U.S.-Israeli war against Iran resulted in blocked vessel traffic through the Strait of Hormuz.
In Southwest’s recent earnings call, the company revealed its fuel expenses were up nearly $900 million in the second quarter this year compared to the same quarter last year.
“This voyage was necessary to secure critically needed refined petroleum products for the state of California due to supply disruptions resulting from the Iran War, and the President has determined that the waiver is necessary in the interest of National defense to allow foreign-flagged vessels to transport critical energy products (oil, gas) and fertilizer between U.S. ports, aiming to stabilize markets during conflict-related disruptions,” vessel shipment details show.
Analysts have dubbed California’s energy infrastructure a “fuel island” as the region is geographically and logistically isolated from other fuel producing districts in the country.
“So far, 12.9 million barrels of petroleum products were shipped to the West Coast in the Jones Act waiver’s first 124 days, an amount nearly 100 percent more than what the linear trend projects for the entire year,” CATO said.
CATO data shows more jet fuel has been sent to the West Coast than any other U.S. district under the waiver in the last 36 years combined.
Statistics released by the Energy Information Administration for the week ending May 29 showed West Coast jet fuel holdings at 10.8 million bbl with 124,000 b/d of imported material arriving at the region’s ports. Compared to a similar week in the prior year, the region’s jet fuel stocks stood at 11.7 million bbl with 174,000 b/d of imports.
California’s outsized jet fuel demand adds to the region’s supply sensitivity as the state leads the nation in jet fuel consumption by using 100 million bbl annually, according to EIA figures.
–Reporting by Sydnee Novak, sbeach@opisnet.com; Editing by Bayan Raji, braji@opisnet.com