Domestic Energy Shipments Are Breaking Records Under the Jones Act Waiver

By Colin Grabow of Cato.

"The Jones Act is a de facto tax on Americans trading with one another. By requiring domestic waterborne commerce to use vessels that cost far more to build and operate than their international counterparts, the law raises shipping costs. That’s a real burden given the significance of transportation in a country as vast as the United States and helps explain why relatively little freight moves by water.

Conversely, economic logic holds that lowering these costs will expand commerce, which is exactly what has happened since the Trump administration issued a Jones Act waiver for energy and fertilizer shipments in March. Freed from the law’s constraints, domestic fuel shipments have surged to unprecedented levels.

PADD 5 Receipts Nearly Set a Record in Five and a Half Months

One of the most dramatic examples of this increase has been to the West Coast, Alaska, and Hawaii, collectively known as PADD 5. According to a recent Energy Information Administration analysis, waterborne shipments of crude oil and petroleum products from the Gulf Coast to PADD 5 in April and May 2026 were more than four times their level in the same months of 2025. April’s volume was more than double the previous monthly record, and shipments remained elevated in May. 

That increase has been sustained. US Maritime Administration (MARAD) data show that in less than six months, waiver shipments have already exceeded the Jones Act fleet’s annual total in every year from 2000 through 2025, with one exception. Only 2024 remains narrowly ahead (by 2.2 percent), and it appears on the verge of being surpassed." 

Jet fuel: More jet fuel has been moved to PADD 5 under the waiver than in the preceding 35 years combined (1990–2025). 

Gasoline blend stock and alkylate: More gasoline blending components and alkylate have been moved into PADD 5 than the Jones Act fleet moved from 2010 through 2025 combined. 

Finished gasoline: The waiver has seen more finished gasoline moved to the West Coast than the Jones Act fleet has moved in the last eight years combined."

"East Coast-bound shipments topped 1.2 million barrels a day in April, which was the highest monthly figure on record and about 11 percent above anything seen pre-waiver."

"In 2017, the CEO of Overseas Shipholding Group, a major Jones Act tanker operator, admitted to the Financial Times that the law was suppressing domestic oil flows: “If there was not a Jones Act, then there probably would be more movements of crude oil from Texas to Philadelphia.”" 

Regulated Markets Are Slow to Handle Change

From Alex Tabarrok. 

"Gowrisankaran, Langer and Reguant have an excellent paper, Energy Transitions in Regulated Markets (WP), in the latest AER.

The basic idea is that regulation designed to prevent utilities from building useless power plants can induce them to keep obsolete power plants. Some background. We regulated electric utilities under the theory that they were natural monopolies and therefore we would do better by pushing their prices down. What’s a reasonable price? Hard to say, so regulated utilities were allowed to recoup their operating costs plus a fair return on their “rate base”—their capital stock. Makes sense, but once profits depended on the size of the capital stock, utilities had an incentive to build too much—the classic Averch–Johnson effect. Regulators responded with “prudence” requirements and the rule that capital must be “used and useful.” In a stable world, that rule is a check, albeit an imperfect check, on so-called gold-plating.

But now consider what happens in a time of technological change, such as a rapid decrease in the cost of generating electricity with natural gas (driven by fracking and improvements in combined-cycle natural-gas (CCNG) technology). In a free market, large decreases in costs would cause firms to abandon coal and move to natural gas—some would do this to make profits, others to avoid losses. In short, the market forces sunk investments to be abandoned when not profitable.

But there is another possibility under regulation. Tell the regulator that your plants are still viable. Well, telling is cheap talk so you keep burning coal to prove that the plant remains useful. If you can keep your base operating that’s better than abandoning it and to signal how valuable your coal plant still is, it may even be worth while to burn coal when the cost exceeds the price of electricity! The authors have some nice data on exactly this point.

Figure 3 takes a little work to understand, but the pattern is clear. Each point represents a state. In panel A, the vertical axis shows how much less likely a coal plant is to run when the cost of coal exceeds the price of electricity. Obviously, a strongly negative coefficient is the economically sensible response: when burning coal is more expensive than buying electricity, the plant should burn less.

The red points represent restructured states and the green points regulated states. In restructured states coal burning falls when prices fall, just as expected. Coal burning in regulated states responds much less. (I.e., the red points generally lie below the green points.) Indeed, the six states with the largest reductions in coal operation are all restructured states.

One objection to this analysis might be that utilities in general are just slow to respond to prices, so on the horizontal axis the authors plot how well utilities respond to a higher price of gas. Note that these coefficients are all negative and there is no obvious difference between regulated and restructured states. In both types of states, utilities respond well to the price of gas, but only in restructured states do utilities respond strongly to the price of coal. (Why coal and not gas? Because the used-and-useful standard binds on capital whose usefulness is in doubt—which, once gas got cheap, meant coal. In other words, the utilities have to defend coal to the regulators, not gas.)

Panel B on the right shows a slightly different way of presenting the same data. The vertical axis is again how much less likely a coal plant is to run when its cost exceeds the electricity price. The horizontal axis is the fraction of generation owned by electric utilities. Regulated states tend to be vertically integrated, while restructured states opened electricity generation to competition, so utility ownership and regulatory status are closely correlated. Regulated states generally have utility ownership above 60%, while all the restructured states but one are below 30%. The best-fit line slopes upward: in other words, the more generation a state’s utilities own, the less coal dispatch responds to price. A different perspective on the same story.

That is the direct empirical evidence. The authors then construct a more ambitious structural model. In theory, regulation could produce either too much or too little investment in the new technology; their estimates imply too much. Much, too much. Not only do regulated utilities retain too much coal, they also build too much gas capacity. In short, they accumulate both too much old capital and too much new capital. Averch–Johnson on steroids.

The bottom line is that regulation under dynamic conditions is much more difficult than under static conditions. My view is that it may not even be worth the candle"

Abstract

Natural gas has replaced coal as the dominant fuel for US electricity generation. However, utilities in regulated US states have retired coal more slowly than others. We build a structural model of rate-of-return regulation during an energy transition where utilities face trade-offs between lowering costs and maintaining and using legacy capacity. A regulated utility facing carbon taxes lowers short-run coal generation 48 percent as much as a cost minimizer would. Thirty years after a sudden energy transition, a cost minimizer has retired 71 percent more coal capacity than the regulated utility. Alternative regulations may jeopardize affordability and reliability goals during energy transitions.

 

How to Escape the Productivity Slump

Removing policy barriers can unleash a new era of productivity and abundance. 

By Jeremy Horpedahl. 

"Summary: For the past half-century, much of the developed world has experienced a puzzling slowdown in productivity growth—the rate at which workers and businesses become more efficient over time. While digital technologies have advanced at a remarkable pace, innovation in the physical world has slowed considerably. The problem is not a lack of scientific breakthroughs or a shortage of good ideas. Rather, it is a failure to translate discoveries into products, infrastructure, and services that improve everyday life. This slowdown is largely the result of policy choices. By reforming outdated permitting systems, using innovation incentives such as R&D prizes and Advance Market Commitments, and reducing barriers created by protected local monopolies, we can accelerate the spread of new technologies and usher in a new era of prosperity.

---

In a previous exploration of the housing affordability crisis, I observed a sobering reality: artificial scarcity is often a policy choice. We have placed arbitrary limits—mostly through local governments—on our ability to build homes, driving up costs and restricting opportunity. But this pattern of self-imposed constraint does not stop at the edges of our neighborhoods. It extends into the institutions and policies that shape economic growth. It is one of the primary reasons why, despite living in an age of extraordinary digital innovation, we remain stuck in a decades-long productivity slump.

Economists often measure technological progress using a concept called Total Factor Productivity (TFP). In simple terms, TFP measures how efficiently an economy turns labor, land, and capital into goods and services. When TFP rises, society discovers better ways to produce more with the same resources.

From the 1920s through the early 1970s, TFP in the United States and much of the developed world grew at more than 2 percent per year. This was the era that gave us commercial aviation, widespread electrification, antibiotics, and the Apollo program. The physical world was transformed in a single generation.

Since the early 1970s, however, productivity growth has slowed dramatically to less than 1 percent in most years. As investor Peter Thiel famously quipped, “We wanted flying cars; instead, we got 140 characters.” Digital technologies have advanced rapidly, while progress in energy, transportation, infrastructure, and advanced manufacturing has been far slower. We can send vast amounts of information across the globe in milliseconds, yet we often struggle to build major infrastructure projects on time or on budget.

A 2020 paper by Nicholas Bloom and co-authors argues that good ideas are getting harder to find – that is, more investment in research and development has become necessary for each new patentable idea. However, more recent research by Teresa Fort and co-authors (currently in working paper form) suggests that this is not the case. The Bloom et al. result may, in fact, be an artifact of focusing on manufacturing firms, which were dominant from about 1970 to 1990. Fort and her co-authors show that patenting and innovation have shifted in recent decades, becoming dominated by firms in information, management, and professional services.

Because manufacturing is a physical process, it is much more likely to be subject to, for example, environmental regulations, whereas an IT firm operates in a much less regulated sector. So, our relative stagnation may not be the result of a scientific drought after all. Universities and research laboratories continue to produce remarkable discoveries. We are not failing at invention; we are failing at diffusion, the process of turning new discoveries into widely used products and services.

The Diffusion Deficit and the Permitting Veto

Innovation does not benefit society until it escapes the laboratory and enters the marketplace. The journey from a peer-reviewed paper to a consumer-ready product is long, expensive, and uncertain. Over time, policymakers have added layer upon layer of regulatory complexity to that journey.

Physical innovation requires physical construction. New technologies need testing facilities, advanced laboratories, semiconductor fabrication plants, energy infrastructure, and transportation networks. Yet building almost anything of significance in the modern West often requires navigating years of environmental reviews, public-comment periods, and multi-agency approvals.

Laws such as the National Environmental Policy Act (NEPA) and state-level counterparts such as the California Environmental Quality Act (CEQA) were originally intended to prevent environmental harm. Over time, however, they have increasingly become tools for the delay of progress. Because these laws frequently allow opponents to challenge projects on procedural grounds, they have contributed to what political scientist Francis Fukuyama calls a “vetocracy”—a system in which many actors can block decisions but few can make them. Average NEPA environmental impact statements now take almost four years to complete, with many extending far beyond a decade. Thankfully, the median is a bit shorter, but still about 2.5 years.

Consider the recent push to reshore semiconductor manufacturing. While the government has allocated billions of dollars in subsidies to build these vital factories, the physical construction is bottlenecked by years of permitting and environmental reviews. A state-of-the-art fabrication plant (commonly called a “fab”) that takes 18 months to build in Taiwan or South Korea can take three to five years just to obtain a permit in the United States.

The result is predictable: projects take longer, cost more, and become less attractive to investors. Even when governments provide subsidies for strategic industries such as semiconductor manufacturing, years of permitting can slow implementation. Time is money, and prolonged regulatory uncertainty discourages investment in capital-intensive industries.

The solution is straightforward, even if politically difficult. Critical infrastructure, advanced manufacturing facilities, and research laboratories should face streamlined approval processes. If projects satisfy clearly defined environmental and safety standards, they should be approved in months rather than years.

Pull Mechanisms: R&D Prizes and Commercialization

Reducing regulatory barriers is only part of the solution. We must also rethink how innovation is encouraged and financed.

In addition to corporate financing, most governments try to support innovation through “push” funding. Researchers receive grants to conduct experiments, purchase equipment, and explore new ideas. This model, some economists argue, can be effective for basic science, especially when commercial applications may be years away.

Commercialization presents a different challenge. Many promising technologies fall into what innovators call the “Valley of Death” – the difficult period between a successful laboratory demonstration and a commercially viable product. At this stage, development costs rise sharply while uncertainty remains high.

That is where “pull” mechanisms become valuable. Instead of paying for research inputs, policymakers reward successful outputs. An Advance Market Commitment (AMC), for example, guarantees that a buyer will purchase a product if it is successfully developed. Rather than funding every possible approach, the sponsor commits to paying for results.

Economist Michael Kremer helped pioneer this approach through vaccine development programs. More recently, Operation Warp Speed demonstrated its effectiveness. The government did more than fund vaccine research; it guaranteed large future purchases for successful vaccines. By reducing market risk, policymakers encouraged firms to accelerate development and manufacturing simultaneously. The result was one of the fastest vaccine-development efforts in history.

Consider other approaches. Throughout history, prizes have also stimulated innovation. The Longitude Prize helped solve a critical navigation problem for maritime trade, while the Ansari X Prize helped launch the private spaceflight industry. Pull mechanisms align private incentives with public goals by rewarding success rather than political connections or grant-writing skill.

Breaking Local Monopolies and Regulatory Capture

When people hear the word “monopoly,” they often think of large technology companies. Yet some of the most significant barriers to innovation exist at the local level.

The electric utility sector provides a clear example of how regulatory design shapes technological adoption. Because most utilities operate as regulated monopolies with government-guaranteed rates of return on capital investments, their business model relies on continuous, large-scale infrastructure growth. 

Put simply, utilities make more money the bigger power plants and power lines they build, so they usually prefer huge projects over things like rooftop solar panels that let people generate their own power without the utility having to build as much infrastructure.

Decentralized energy technologies—such as local battery storage, micro-grids, and advanced management software—directly threaten this model by optimizing the existing grid and reducing the need for new capital projects. As a result, studies from the MIT Energy Initiative and industry financial analysts indicate that utilities frequently leverage legacy regulatory processes to delay or block these decentralized innovations from integrating into the wider network.

Similar dynamics exist elsewhere. State dealership franchise laws frequently restrict direct-to-consumer automobile sales, making it more difficult for new manufacturers to enter the market. Occupational licensing requirements now affect roughly one-fifth of American workers and can create barriers to entry that limit competition and labor mobility.

Innovation depends on what economist Joseph Schumpeter called “creative destruction” – the replacement of older, less efficient business models with better ones. When established interests use regulation to shield themselves from competition, they slow technological adoption and reduce future productivity growth. Encouraging competition and reducing regulatory barriers at the state and local level would help accelerate the diffusion of new ideas throughout the economy.

Choosing Abundance

The productivity slowdown is not an immutable law of nature. It is, at least in part, the consequence of policy choices. Human ingenuity remains as powerful as ever. We have more scientists, more capital, and better tools than any previous generation. The challenge is not generating ideas; it is allowing those ideas to spread.

By streamlining permitting processes, expanding the use of R&D prizes and Advance Market Commitments, and reducing barriers created by protected local monopolies, we can accelerate innovation in the physical world.

An additional one or two percentage points of annual productivity growth may sound insignificant. Yet when compounded over decades, the effects are transformative. Higher productivity means higher incomes, better health outcomes, more abundant energy, and greater opportunities for future generations. The ideas already exist. The question is whether we will allow them to flourish."

The Endangered Species Act Reduces Housing

From Alex Tabarrok.

"Max Tabarrok’s paper on the Endangered Species Act and housing (WP) has just been published in the Journal of Public Economics! It’s a clever paper: Max observed that the moment an animal is put on the endangered species list, developers face enhanced compliance costs and liability risk. But what’s important for an empirical economist is that this increased regulation isn’t national–it binds just where the species lives. Thus, the ESA creates many natural experiments, places where it binds and nearby places where it doesn’t and the list changes over time–there were 82 listings in 1970 and nearly 1500 today–and there are even some de-listings which reduce regulation.

Here, for example, is a picture of the habitat (red) and control areas (blue) for when the Northern Long Eared Bat was put on the endangered species list.

 

The bottom left panel measures annual housing permits per 1000 1980 pop in treatment (red) versus control (blue) areas. The bottom right is the event study coefficients. After the bat was put on the endangered species list, the number of new housing permits declined in areas where bats might live relative to control areas.

Here is what happened when the Peregrine falcon was delisted. Before the delisting, housing permits were lower in regions (red) where the falcon had habitat compared to controls areas but after the delisting the treatment areas caught up to the control areas.

 

Overall:

…this paper provides evidence that an additional endangered species listing reduces annual housing permit flows by 0.5 permits per thousand 1980 residents, about 10% of the average place’s permit flow. Accounting for spillovers and diminishing costs, my estimates suggest the aggregate effect of the ESA has been to reduce the national housing stock by…roughly 6.3 million missing units over 1980–2024, about 4% of the 2025 housing stock.

Now, you might say, ok this shows the ESA has costs. What about the benefits of the ESA? It’s hard to measure the benefits, of course, or even know if the ESA is effective. But Max shows using satellite data that there are quite a few places where the ESA binds on infill development.

…at the intensive margin of housing production, new developments are often replacing existing buildings or are filling in space in a highly developed area that could not host endangered species even if no new construction took place. On the intensive margin, the tradeoff with species protection does not bind, and may even be positive sum as it substitutes for less dense greenfield development. Therefore, whether and how much the ESA constrains development on the extensive vs intensive margin is relevant to the tradeoffs we face between housing production and species protection, and thus is relevant to the aggregate welfare effects of the law.

In this section I extend the main empirical specification of the paper to satellite data on land use from the National Land Cover Database (NLCD) (Multi-Resolution Land Characteristics Consortium, 2025) and to heterogeneity within the Building Permits Survey to assess where the effects of the Endangered Species Act are accruing.

The NLCD is a set of satellite images of the United States compiled and pre-classified by the U.S. Geological Survey. They classify 30-square-meter pixels into one of fifteen land use groups, including four levels of development, three types of forest, and two types of wetland. The NLCD has annual files going back to 1985. I overlap these pixels with the map of permit-issuing places in the BPS using constant 2024 borders, and track the changes to pixels within each place over time. The hazard rate of extensive margin or greenfield development is measured by the flow of non-developed pixels (e.g., forests or wetlands) into any of the four levels of developed land use, divided by the total area of greenfield land use.

He concludes:

The most urbanized 15% of places are responsible for 90% of total permit flows, while the highest-value endangered species habitat is well outside these developed areas. The Endangered Species Act seems to restrict infill development in these dense areas as much as it restricts greenfield development in exurban sprawl (Table 9, Table 10, Table 11). Relaxing the legal mechanism of the Endangered Species Act in already developed areas may increase permit flows in dense, energy- and land-efficient cities in California and on the East Coast at the expense of sprawling suburbs in the Sun Belt, increasing both housing supply and endangered species habitat.

The Trump administration is trying to limit the ESA, multiple lawsuits have already been filed. Max’s paper is thus timely and it points to a fix that might satisfy housing proponents and environmentalists: relax the ESA’s bite on infill and redevelopment in already-built-up areas, where the housing-versus-habitat tradeoff barely binds, rather than across the board.

Addendum: Obviously, I am pleased as punch to see this paper in print. Max began writing the paper before graduate school–he has only just finished his first year. He was fortunate to have had lots of great advice along the way, most notably from a superb pre-doc he did at Dartmouth under the auspices of Heidi Williams."

New York’s Data Center Self-Sabotage Gov. Kathy Hochul finds another way to hurt economic development in the state.

WSJ editorial.

The article discusses how it is regulation and not data centers that are driving up costs. 

Evicting Wall Street From the Housing Market Will Be Messy

Law restricting activities of big investors in residential real estate could mean less cash to build new supply

By Carol Ryan of The WSJ. Excerpts:

"Under the 21st Century ROAD to Housing Act . . . investors who already own more than 350 family homes can’t buy any more from the existing housing stock."

"Any landlords that don’t already have scale will find it hard to expand their portfolios through the exemptions."

"Big landlords are being nudged to pour cash into the build-to-rent sector instead. This means taking on development risk and constructing entire rental neighborhoods from scratch. The benefit of constructing whole rental communities in one area is that they are much cheaper to maintain than homes that are scattered across dispersed neighborhoods."

"Build-to-rent is exempt from restrictions under the new law. Like multifamily apartment buildings, it is an area of the housing market in which large investors can continue to operate freely."

"Anyone considering putting money into the housing market . . . must now weigh the risk that future administrations could tighten the rules further."

"Returns on build-to-rent investments don’t look high enough to compensate for the risk."

"Build-to-rent communities are hard—or impossible under some zoning rules—to sell off individually to consumers"

"Eight large institutional investors were net sellers of more than 3,000 homes in the second quarter of this year, a fivefold increase in net-selling activity from the same period of last year"

"some smaller investors plan to cash out permanently by selling homes to individual home buyers over time" 

Keeping Cool: The Air Conditioner That Changed America

The time price of air conditioning has fallen 98.6 percent since 1952. That ordinary luxury saves lives every summer.

By Gale L. Pooley. He teaches US economic history at Utah Tech University. Excerpt:

"One of the great triumphs of entrepreneurial capitalism is how quickly air conditioning traveled the familiar path from luxury to necessity. What began as an expensive convenience for a tiny elite became, within a generation, affordable to ordinary families. The market did not merely invent comfort — it democratized it.

In their report Time Well Spent: The Declining Real Cost of Living in America, Michael Cox and Richard Alm found that a 5,500-BTU air-conditioning unit cost about $350 in 1952. At the time, entry-level workers earned roughly 83 cents an hour, putting the time price at 422 hours.

Today, Walmart sells a far more efficient 6,000 BTU air-conditioning unit (with a remote control) for only $115. The current hourly wage for limited-service restaurant workers is around $19 an hour, putting the time price at six hours.

The time price has decreased by 98.6 percent. For the time it took US workers to earn the money to buy one unit in 1952, they get 70 today.

If air conditioning saves lives, why don’t more Europeans have it?

Europe’s electricity prices are typically much higher than the US, driven by higher taxes, network costs, renewable energy mandates, and energy import dependence. Customers in the US pay 17 to 19 cents per kilowatt-hour (kWh) compared to 25 to 32 cents in Europe. This means Europeans pay roughly 47 to 68 percent more per kWh than US customers.

Americans are also much richer than Europeans. According to World Bank data, American gross domestic product (GDP) per capita was $84,809 in 2024, while the European Union’s was 25 percent lower at $63,585. That $21,224 difference could buy a lot of comfortable cooling.

The European Union also prioritizes environmental targets over human comfort by imposing strict regulations for heating and cooling, making these amenities much more costly. The commission encourages citizens to use fans instead of air conditioning. Imagine the government doing that in Phoenix and Atlanta in July. Italy, Greece, and Spain even announced temperature limits in public spaces during the 2022 heatwave in an effort to meet these environmental objectives. Spain limited air conditioners to be set no lower than 80°F. No wonder European productivity is 38 percent lower than the US.

Historic preservation laws and strict landlord rules frequently ban exterior window units to maintain aesthetic uniformity.

While air conditioning ownership increases households’ electricity consumption, it may be a small price to pay for comfort and avoiding death.

The problem is not the climate but the policy mindset. Too many European regulators approach energy and technology through the ideological lens of scarcity rather than creative innovation and human flourishing. One reason such policies persist is that the officials who design them are largely insulated from the consequences of their decisions and rarely experience their costs directly. Instead, those costs are borne by millions of ordinary citizens.

Air conditioning is not ultimately a story about cooling. It is a story about knowledge. It transformed oppressive heat into comfort, inhospitable regions into thriving communities, and summer misery into year-round productivity. Coal, copper, and electricity become valuable only after humans discover how to harness them. The history of air conditioning is the history of knowledge triumphing over nature’s constraints.

The ultimate resource is neither energy nor matter. It is the infinite capacity of human beings to learn, create, and discover."

NYC’s socialist movement forcing millionaires to flee the state — leaving Mamdani, DSA in a bind

By Judge Glock. Excerpts:

"A new Citizens Budget Committee report found that New York’s share of millionaires, those earning more than a million dollars a year, declined more than any other state since 2010. 

The state went from having 12.7% of all millionaires in the nation to 8.7%. 

Worse yet, in the more recent years, the state’s highest earners have been leaving much faster than its lowest earners." 

"New York City’s tax rates on the wealthy are already the highest in the nation."

"Economists Joshua Rauh and Ryan Shyu found that a California income-tax hike drove almost 1% of top taxable incomes out of the state in a single year. 

The loss of taxpayers and other changes among the well-off meant the state lost most of the cash it would otherwise have raised from the tax. 

Another study, by Enrico Moretti and Daniel Wilson, looked at how state taxes affected the movement of top scientists, a group that’s not thought to be particularly mercenary or focused on cash. 

They found a 1% increase in after-tax income in a state brought nearly 2% more star scientists into the state — while a tax increase drove them away."

"New York’s high rates explain why the state lost more than $7 billion of annual taxpayer income just to Fairfield County in Connecticut over a five-year span, 2019 to 2023 — and more than $7 billion just to Palm Beach County in Florida." 

It’s Time To Legalize Kei Trucks

Restrictions on kei trucks are another way government drives up the cost of living

By Scott Beyer of The Independent Institute. 

"If you’ve spent time traveling the Third World—or Japan—you’ve seen them: tiny pickup trucks, built for cargo, hauling lumber, produce, construction materials, or even groups of workers. They’re ubiquitous in developing countries because they’re inexpensive, fuel-efficient, and well-suited for certain types of work. Yet for decades they’ve been largely absent from U.S. roads. That’s a shame, because the humble Japanese kei truck represents the kind of practical vehicle that would benefit Americans.

Kei trucks originated in Japan after World War II as part of the country’s “kei” (or light vehicle) classification. Manufacturers such as Suzuki and Mitsubishi designed them to meet strict size and engine limits while remaining surprisingly capable work vehicles. Although they typically produce around 50 horsepower, and sometimes only have top speeds of 60mph, they can haul loads approaching 1,000 pounds while achieving fuel economy that exceeds 35mpg. 

The reason Americans rarely see kei trucks has to do with regulation, not lack of demand. Federal law prevents newer kei models because imported vehicles must comply with the same crashworthiness, lighting, and emissions standards that apply to vehicles originally sold in the U.S. Meeting those standards is not worth it for Japanese manufacturers who never intended to sell kei trucks in the American market. 

There is one notable exception: once a vehicle reaches 25 years of age, it is exempt from many of those federal safety requirements. That means Americans who want a kei truck are largely limited to importing vehicles that are at least a quarter-century old. Even then, ownership is not straightforward. Several states—including Rhode Island and Georgia—have refused to title or register many kei trucks for normal highway use, while Maine has enacted restrictions that effectively bar them from public roads. Other states permit registration only under limited classifications, such as off-road, farm, or low-speed vehicle designations. 

The Trump administration has broadly emphasized cutting regulations and boosting domestic industry, and has directed that energy towards kei trucks. During the rollout of the “Freedom Means Affordable Cars” initiative, President Trump called the trucks “cute” and “beautiful” while criticizing barriers that prevent them from reaching U.S. soil. He tasked Transportation Secretary Sean Duffy with clearing obstacles to domestic production, so that kei-style trucks could bypass import tariffs like the 25% Chicken Tax (which specifically targets light trucks). However, this directive remains in early stages and faces hurdles within the federal code.

At state level, a wave of reforms has at least expanded access to the 25+ year-old kei trucks. Last year, Texas Senate Bill 1816 formally legalized titling, registration, and on-road use after earlier DMV inconsistencies. Such reforms typically enable operation, but mandate lower speed limits, require standard insurance/safety inspections, and can vary by jurisdiction. Meanwhile in other states, such as Oregon, reform efforts failed and kei trucks remain illegal to use on public roads. 

There are compelling economic reasons to welcome these vehicles. A brand-new full-size pickup truck now sells for $66,000 on average in America. It’s hard to find even quality used trucks nowadays for under $20,000. Brand new kei trucks are often sold in Japan for under $10,000. Many plumbers, electricians, landscapers, carpenters, farmers, and other small business owners would benefit from this cheaper option and don’t need massive four-door pickups that tow 15,000 pounds. 

Kei trucks are also at times more practical. Some models feature fold-down bed sides that allow forklifts to load pallets directly from either side of the truck. Their small footprint allows them to maneuver through tight alleys, narrow driveways, and crowded work sites that would frustrate drivers of a large pickup.

The most common argument against kei trucks concerns safety. Critics point out that they lack many of the crash protections found in newer American vehicles. That observation is true, but it also raises an obvious question: are kei trucks really so dangerous that Americans cannot be trusted to choose them, while motorcycles—which offer no crash protection whatsoever—remain legal? Society routinely allows adults to accept varying risk levels. 

Environmental objections are similarly unpersuasive. Some critics argue that kei trucks fail to meet modern emissions standards. Yet this argument actually highlights the inconsistency of current policy, which allows 25-year-old vehicles but not cleaner, newer versions. Kei trucks also achieve far better fuel economy than most full-size pickups.

Ultimately, kei trucks serve as a reminder that government regulations make everyday life more expensive. Here is a vehicle that has proven itself on farms, construction sites, and city streets worldwide, and is used by millions. Yet Americans cannot purchase a new one, even though their retail value starts at about 1/10th the average price of a new pickup truck. Nor can they purchase a 25-year-old one without paying thousands in extra taxes and duties. That is because regulators have more say in what consumers can drive than consumers themselves. The Trump administration should move forward with its kei truck deregulation efforts."

Businesses leaving Illinois have rapidly accelerated

 Tweet from Brian Costing.

 

Air Conditioning, Scourge of the French Left

Heat waves kill thousands in Europe, but politicians resist the relief Americans can take for granted

By Alexander Kustov. He is an associate professor of global affairs at the University of Notre Dame. Excerpts:

"The French left argues that air conditioning is a selfish indulgence and an ecological menace. Jean-Luc Mélenchon, the country’s most prominent left-wing leader, warned that cooling would mean “increasing the damage,” and says he wouldn’t expose his grandchildren to air conditioning because it “destroys your sinuses.”"

"The economist Alan Barreca and his colleagues found that the spread of home cooling explains most of the decline in “hot-day-related fatalities” in the U.S. since 1960."

"Air conditioning accounts for about 3% of global emissions today, and in France, where two-thirds of the power is nuclear and much of the rest is low-carbon, running a unit is close to carbon-free."

"a group of left-wing economists, among them Joseph Stiglitz, Thomas Piketty and Kate Raworth, declared economic growth “a doomed strategy” and signed on in support of a road map, developed by United Nations Special Rapporteur Olivier De Schutter, for a new “degrowth economy.” Its policies aim to reduce material consumption, shorten the workweek, and impose caps on personal income. Underlying this road map is the idea that wanting to be comfortable is shameful."

"In France, a condominium owner generally needs the consent of the other owners to install air conditioning. In the country’s heritage zones, a state architect can veto any unit visible from the street. In England and Wales, an air conditioner that has no heating function requires permission. The canton of Geneva issues a permit for comfort cooling only to people who prove they need it. Spain forbids public and commercial buildings from cooling below 80 degrees."

"The left’s most respectable voices are telling grandmothers to draw down the shutters and wait it out." 

As Europe Sweats, Some Politicians Talk of Air-Conditioning, Not Climate Action

Heat-related deaths and disruptions to daily life are forcing politicians to reckon, in different ways, with a rapidly warming planet

By Michael D. Shear and Jeanna Smialek of The NY Times. Excerpts:

"In the context of northern Europe’s traditionally mild, temperate climate, some left-wing and green parties opposed air-conditioning and have instead favored renovating buildings with architectural fixes to keep them cool when it gets hot. But the dangers to health posed by this week’s heat wave are piling pressure on that view — and changing minds.

In the Belgian city of Ghent, which is run mostly by left-of-center politicians, the municipal website this week discouraged citizens from using air-conditioners, saying that “the best air-conditioner is a tree” and advising they use fans and request a free tree to plant outside their houses.

Maurits Vande Reyde, a right-wing member of the Flemish Parliament, responded to Ghent’s recommendations on social media.

“It is absurd that all governments in our country, under pressure from left-green mumbo-jumbo, advise against the use of air-conditioning,” he wrote on Tuesday. “The most efficient and best solution. How many deaths would the government already have on its conscience with this kind of absurd advice?”

After The New York Times sent a request for comment, Ghent removed wording that read “avoid air-conditioners,” replacing it with the phrase “cool smartly.”

Thomas Dierckens, a spokesman for the mayor of Ghent, said in a written comment that the city was not against air-conditioning — noting that it had installed 30 portable air-conditioners into day care centers this week.

Marine Tondelier, the head of the Green Party in France, acknowledged that she was “breaking a taboo” when she said on Tuesday that “there are places where we can no longer do without air-conditioning.”

In London, Sadiq Khan, the center-left Labour Party mayor, said on Thursday that air-conditioning would need to be installed in the capital’s schools, offices and hospitals, as he warned that London needed to “act now” to strengthen its resilience ahead of worse heat waves to come. And at the European level, Terry Reintke, co-president of the European Parliament’s Green group, said in an interview that some air-conditioning was necessary, alongside longer-term solutions like planting more green spaces."

Record-breaking heat waves are challenging the Europe’s longstanding resistance to cooling technology, spawning new political battles

See Europe Is Hot as Hell. Why Doesn’t It Want Air Conditioning? by Matthew Dalton of The WSJ. Excerpts:

"European infrastructure was designed for a climate that was much cooler than today. Temperatures in the northern half of the continent rarely rose above 90 degrees Fahrenheit and temperatures over 100 were almost unheard of. 

Rail lines and electrical grids weren’t built to withstand extreme heat. Many of the continent’s buildings lack design features that would keep them cooler in the summer, such as shutters to block out the sun.

Most of the continent’s homes and institutions lack air conditioning. In Italy, around 56% of homes are equipped with the technology, a figure that falls to 25% in France and 5% in the U.K. Europe’s summer heat waves often claim tens of thousands of lives, far more than in the U.S., a difference that scientists say is partly due to the lack of air conditioning."

"Europe is the fastest warming continent, with temperatures that are already around 2.5 degrees Celsius warmer than in the preindustrial era, compared with around 1.4 degrees for the earth as a whole.

Last week, Paris topped 40 degrees Celsius (104 degrees Fahrenheit) on Wednesday and Thursday. That has only happened on three other days since official records began in the 19th century: in 1947, 2019 and 2022."

"Authorities across Europe have tried to avoid air conditioning on a large scale. The side effects from a big increase in air conditioning are considered to be large: The devices are costly; they are energy hungry; and they eject hot air into the street, warming cities even more. Moreover, they are a nuisance in dense urban neighborhoods, afflicting residents with the omnipresent hum of compressors."

In London, city regulations require developers to adopt cooler design measures—natural ventilation, shutters on windows and better insulation—before installing air conditioning in new buildings. Paris and Berlin have plans to incorporate more plants into the city landscape, reducing the heat-magnifying effect of stone during a heat wave. Paris opened the Canal Saint-Martin for swimming during the latest heat wave.

The problem is such measures are considerably less effective than air conditioning at reducing the threat of extreme heat, according to the Intergovernmental Panel on Climate Change, the U.N.’s official climate science body. In its latest report on adaptation in Europe, the IPCC rates air conditioning as a highly-effective response to heat waves, while mechanical ventilation was rated medium-effectiveness and urban greenery was given a low rating.

Measures such as mechanical ventilation or shading don’t work when the heat is relentless, experts say. During the latest heat wave, 85-degree Fahrenheit temperatures at night didn’t allow buildings to cool down before the sun rose to bake them again.

Radhika Khosla, a climate scientist at Oxford University, said countries should mix better building design with air conditioning to limit the devices’ energy consumption. “You want to use it for what it’s really needed as opposed to making it your go-to solution,” she said."

"In some European cities, installation of an air conditioner in an apartment requires approval from the entire building. Local officials also get a say, to make sure the system respects architectural norms, noise laws and the city’s energy goals. 

In Geneva, the installation of an air conditioner is subject to strict energy-usage rules. London officials have forced homeowners to remove air conditioning because they haven’t resorted to other cooling methods, such as ceiling fans."

"First, residents [in Paris] must gain approval from the neighbors. Then, if the system is visible from the street, local officials can refuse if it mars the iconic, limestone facades of the city’s Haussmannian buildings."

"Under French law, a building association can block the installation of a system if it produces more than five decibels during the day or three at night, roughly the noise of a light breeze." 

Chevron Deference Is Gone. Where Is Kagan’s ‘Massive Shock’?

Loper Bright isn’t without costs, but it has benefits too—and it hasn’t proved particularly disruptive.

By John Chisholm. He is a trustee of the Santa Fe Institute and of the Foundation for Economic Education. Excerpts:

"When the Supreme Court ended Chevron deference, one of the most consequential doctrines in American law, Justice Elena Kagan warned in dissent that it would “cause a massive shock to the legal system.” Two years later, that hasn’t happened.

In Loper Bright Enterprises v. Raimondo (2024), a 6-3 majority discarded a 40-year-old rule for interpreting “ambiguous” statutes. Under Chevron v. Natural Resources Defense Council (1984), judges were obligated to defer any time a federal agency made a “reasonable” interpretation of the law. Loper Bright was the last in a series of cases in recent years narrowing Chevron. Now courts, not agencies, must determine the best reading of the law."

"Two economic lenses bring those benefits into focus, revealing why Loper Bright is the sounder doctrine in the long run."

"The first lens is regulatory stability."

"The second lens is cognitive diversity. Social scientist Scott Page has shown that for hard problems, a diverse group of decision-makers tends to outperform a homogeneous group of higher-ability experts."

"public debate and cost-benefit analyses systematically overweight Loper Bright’s costs—the same bias that drove Chevron’s centralization in the first place."

"Two years on, no “massive shock” has materialized. Agencies still prevail in most challenges. Empirical studies put their win rate at roughly 75% when courts applied Chevron and near 60% on established rules since Loper Bright." 

A Roundup Supreme Court Victory

A 7-2 majority stops a mass tort attempt to evade federal law on regulating a Monsanto pesticide

WSJ editorial. Excerpts:

"the Federal Insecticide, Fungicide, and Rodenticide Act (Fifra) . . . establishes a regulatory scheme for the Environmental Protection Agency to review and approve pesticides. It also expressly bars states from imposing requirements “for labeling or packaging in addition to or different from those required” by the agency."

"“For the more than three decades since, EPA has repeatedly re-evaluated glyphosate and has repeatedly concluded that glyphosate is not likely to cause cancer,” Justice Kavanaugh writes. “As a matter of federal law, Monsanto legally must use a label without a cancer warning unless and until EPA approves or requires a change.”"

"Only “if EPA determines that a given warning is necessary for a pesticide’s label and the manufacturer then proceeds to sell the pesticide without that warning, the manufacturer might face liability for misbranding,” Justice Kavanaugh explains." 

 Also see Bayer Wins Supreme Court Challenge Over Roundup Litigation: The 7-2 decision will help the company in its battle to resolve thousands of claims that the popular weedkiller caused cancer by Lydia Wheeler and Patrick Thomas of The WSJ. Excerpts:

"a federal regulator—the Environmental Protection Agency—didn’t require the product to carry a warning label"

"federal law requires it to use the EPA-approved label without a cancer warning, Justice Brett Kavanaugh wrote for the court. The goal of the federal law—to create a uniform labeling system—“would otherwise be impossible to achieve,” he said."

"The EPA has repeatedly determined that it isn’t likely to be carcinogenic in humans and doesn’t need a label that includes a cancer warning."

Chuck Schumer’s Chip Shortage

A Micron plant in New York is years behind schedule for all the reasons you’d expect

WSJ editorial. Excerpt:

"Consider Micron’s massive fabricator project in upstate New York, which it announced in October 2022. “With the CHIPS and Science bill I wrote and championed as the fuse, Micron’s $100 billion investment in Upstate New York will fundamentally transform the region into a global hub for manufacturing,” New York Sen. Chuck Schumer boasted."

"The 2022 Chips Act provided some $53 billion, plus a 25% investment tax credit, to subsidize U.S. chip-making."

"Congress in 2024 passed a law exempting some semiconductor projects from the National Environmental Policy Act’s stringent environmental reviews. But the exemptions don’t apply to Micron’s project."

"it includes hundreds of acres of wetlands and forestland that are nesting areas for endangered bats. This makes permitting and building more complicated. Trees can only be chopped down when bats aren’t nesting—i.e., from November to March."

"Construction was supposed to start two years ago, but tree clearing didn’t begin until this past January"

"environmental impact statement numbered more than 700 pages" 

New Data Lay Bare the Jones Act’s Broken Shipbuilding Bargain

By Colin Grabow of Cato. 

"The Jones Act rests upon a tacit bargain: Americans pay higher costs because of the law’s prohibition on foreign-built and internationally flagged ships transporting goods within the United States, and in exchange, they receive what the Shipbuilders Council of America describes as a “robust and competitive” domestic shipyard industrial base. But new data from the United Nations Conference on Trade and Development reveal how thoroughly that bargain has been broken.

In 2025, the United States ranked 19th in commercial shipbuilding output, accounting for just 0.03 percent of global gross tonnage delivered. The shipbuilding output of the world’s second-largest manufacturing country is measured in the hundredths of a percent. The United States was not just behind the shipbuilding powerhouses of China, South Korea, and Japan, but also far smaller countries. It was outproduced by Poland, Romania, and the Iberian Peninsula (Spain and Portugal combined). It delivered only 6 percent more gross tonnage than Croatia.

This snapshot is not an anomaly. In 2024, the United States also ranked 19th, with 0.04 percent of global output. So far this decade, the figure stands at 0.08 percent. From 2020 to 2025, 16 countries have outbuilt the United States, including the Netherlands, Norway, and Singapore (the last two of which each have populations smaller than the metro Atlanta region). Such numbers underscore the Navy’s fiscal year 2025 shipbuilding plan, as cited by the Government Accountability Office, that US commercial shipbuilding has experienced a “near-total collapse.”

There is no mystery behind this performance. US shipbuilding costs are so far out of line with global prices that demand has shriveled accordingly. Energy infrastructure company Kinder Morgan estimates that a US-built medium-range tanker would cost at least $240 million — a hypothetical, since no such vessel has actually been delivered by an American shipyard since 2017 — compared to $51 million abroad. Three containerships currently under construction in Philadelphia for Matson Navigation are running over $335 million apiece, against a maximum of $75 million to build the same ships overseas.

Such staggering cost premiums mean little demand for US-built vessels, not only for export but even within the captive domestic market. Rather than purchase new ships, for example, Jones Act carrier Pasha Hawaii has dispatched both of its 1980-built containerships to China to have their engines upgraded from steam to liquefied natural gas. The company points out that its ship, George II, was the first vessel in the world to undergo such a conversion. That distinction exists only because, in any other country, the ship would have been scrapped long ago and replaced with new construction (the average age of containerships in the global fleet is around 14 years). George II’s 1980-built sister ship, Horizon Spirit, was towed from California to China last year for its own conversion.

Overseas Shipholding Group tells a similar story. Rather than building new ships, the company is pouring over $60 million into repowering its Alaska-class tankers — the newest of which dates to 2006 — to keep them running well into the future. The US Maritime Administration places the nominal service life of a tanker at 20 years, and the Wall Street Journal recently noted that 15 is the age at which tankers begin to see their parts breaking down. Yet OSG’s chief operating officer has indicated that the company intends to run its tankers until age 40. 

The pattern extends beyond cargo ships, with the offshore wind sector and ferry services likewise opting to repurpose aging vessels rather than order new ones.

The Jones Act’s protectionist logic holds that shielding the US commercial shipbuilding industry from foreign competition ensures its strength. The evidence is an unambiguous refutation. At 0.03 percent of global output, the notion that the United States would somehow fare even worse without the Jones Act requires believing that a country home to the world’s largest economy and long renowned for its dynamism and innovation would have no commercial shipbuilding at all. It is a proposition that strains credulity.

By any objective standard, the Jones Act has failed. The shipyard industrial base is neither robust nor competitive. Forbidding Americans from using vastly cheaper foreign-built vessels in domestic commerce in exchange for shipbuilding that hovers barely above zero does not make sense. The bargain is broken, and American consumers and businesses — and even the maritime industry the Jones Act ostensibly exists to promote — are paying for it."

The Effect of Online Sales Bans on E‑Cigarette Use

From Jeffrey Miron.

"Despite reports that they are less harmful than regular cigarettes, legislators have targeted e-cigarettes and vapes via crackdowns and online sales bans, citing a desire to protect young people.

A new study examines the effect of online sales bans on use of electronic nicotine delivery systems (ENDS). The study

used data from five national surveys conducted between 2013 and 2023 and leveraged the staggered adoption of the bans across states … [to] reveal no evidence that prohibiting online sales reduced youth e‑cigarette use. … Furthermore, these bans had a minimal effect on the frequency of use among continuing users.

The legislation was ineffective because

young people rarely used the internet to obtain ENDS products before the bans. … Although the bans significantly reduced online purchases of ENDS products, the overall reduction in youth use was less than 1 percentage point.

Indeed,

online purchases fell by 40–50 percent on average, suggesting that young people continued to obtain ENDS products online through illegal shipments … [and] shifted from online to in-person purchases and obtained more ENDS products from family and friends.

The bans also did not stop adults from using ENDS; the study shows

no evidence that online sales bans reduced e‑cigarette or cigarette use among adults, even though adults use these products at higher rates than young people."

The Proxy Advisers Strike Back

ISS and Glass Lewis join New York City in trying to stop Exxon from moving to Texas

WSJ editorial. Excerpts:

"Activists with little stake in companies have abused the shareholder proxy process to drive their environmental, social and governance (ESG) political agenda. This includes resolutions requiring CO2 emission cuts and workforce diversity audits. Plaintiff firms and government pension funds are using shareholder lawsuits to shake down companies.

It’s often less expensive for companies to settle lawsuits than defend against them. One reason is courts in states like Delaware and New Jersey have become unpredictable. Recall how a Delaware judge in 2024 invalidated Tesla CEO Elon Musk’s pay package—which shareholders had twice approved—on the dubious rationale that it violated the state’s “fairness” standard. 

All of this explains why Exxon is joining a parade of companies, including Tesla, Space X, Coinbase and Dillard’s, that have moved their legal homes to Texas."

"Glass Lewis and ISS, which control 90% of the proxy advisory market, also fear their power over companies will wane if activists face a higher burden to bring ESG resolutions."

"Limiting access to the proxy ballot for political activists who don’t have a stake in a company’s long-term success is in the interest of shareholders."

"“substantial portion of the S&P 500 including the majority of Delaware incorporated issuers, maintain exclusive-forum provisions designating a single court for internal affairs litigation.”" 

Pope Leo’s AI Manifesto

His defense of human agency is welcome but not his faith in the state

WSJ editorial. Excerpts:

"When it comes to AI, his encyclical mostly recites the most pessimistic prophecies. He largely dismisses AI’s potential benefits, such as faster and less expensive drug development and medical cures. His call for more government regulation of AI echoes opponents of capitalism like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez."

"We’ve been around a while and don’t recall when anyone relied “solely” on the free market. Western governments now snatch as much as half of GDP and regulate nearly every part of business life."

"Throughout history the diffusion of technology has democratized information and improved living standards, especially for the poor. The internet and social media have enabled people living under repressive regimes to share information"

"He calls for regulation of algorithms that “influence credit distribution, personnel selection or access to services and opportunities” and “measures to ensure equity: taxation, social protection and industrial policies.”"

"government control is likely to result in an even greater concentration of power. Regulation tends to protect incumbents and retard competition."