U.S. SHIPPING SUBSIDIES AND OCEAN SHIPPING OF PETROLEUM: POLICY CHOICES

United States oil imports are predominantly carried in non-U.S. ships, a fact that some interpret as an energy security problem whose solution lies in increasing federal assistance to U.S. shipbuilding and shipping industries. This paper examines three options (one regulatory, two budgetary) for such federal assistance. Examination of the options comprises estimates of relative costs, consequences for traditional U.S. maritime goals, and implications for national security. The options are found to differ significantly in respect to relative cost and capacity to meet military security needs. As background, the paper also analyzes the costs of U.S. shipbuilding and shipping industries relative to their foreign counterparts. It thereby indicates why, and how much, federal assistance would be required to satisfy national security goals. The paper concludes that the regulatory policy option (cargo preference) has the highest relative cost and is the least effective for meeting national security goals.