White House drops plan to let foreign vessels move SPR oil

Fri Jun 24, 2011 4:41pm BST

* SPR oil sale terms now favor U.S. vessels to move crude

* US shipping group said govt was helping foreign workers

By Tom Doggett

WASHINGTON, June 24 (Reuters) - The Obama administration on Friday backtracked on its plan to make it easier for foreign-based ships to move the millions of barrels of emergency crude oil the government hopes to sell to ease expected tight global supply.

Under the administration's plans announced on Thursday to sell 30 million barrels of oil from the Strategic Petroleum Reserve, the government said it would provide an automatic waiver from the Jones Act, a federal law that prevents foreign ships from transporting U.S. goods, including crude oil, between American ports.

The Jones Act, created to support jobs in the U.S. maritime industry, requires that goods moved between U.S. ports be carried by ships built in the United States, owned by Americans and have U.S. crews.

The administration reversed its decision on Friday following criticism from the U.S. maritime sector.

"We are dumbfounded by President Obama's decision to disregard the American maritime industry, which has sufficient capacity to complete this work," the American Maritime Partnership said in a statement on Thursday.

The Energy Department updated the terms of the oil sale on Friday morning, saying there would no longer be an automatic waiver of the U.S. shipping law. (Terms of SPR sale: www.spr.doe.gov/)

However, companies wanting to transport by water any of the SPR crude could still apply to the government for a waiver of the Jones Act.

The department said there would be plenty of U.S.-flagged vessels available to move the crude.

(Reporting by Tom Doggett; Editing by Lisa Shumaker)