DO SECRETARY of Transportation Elizabeth Dole and presidential assistant Edwin Meese have better things to do than decide which shipping line should carry oil from Valdez, Alaska, to other American ports? You'd think so. But Mrs. Dole and Mr. Meese have been spending considerable time on just that question, because of the way this nation subsidizes maritime interests. They have been assisted in these awesome deliberations by some of Washington's most talented and expensive lawyers and public relations people.
All this has come about because one maritime operator, Leo Berger, wants to give his subsidy back to the Treasury, and former transportation secretary Drew Lewis proposed a regulation allowing that. Capt. Berger's Apex Marine Corp. owns nine U.S.-flag oil tankers whose construction was subsidized by the government and which are eligible for continuing operating subsidies. They compete with foreign-flag ships on international routes, but under the Jones Act they are not allowed to compete on routes within the United States. Those are reserved for unsubsidized U.S.-flag ships. With the drop in oil prices, there is vast tanker overcapacity on international routes, and Capt. Berger's ships are not fuel-efficient, because the U.S. shipyards in which they were required to be built couldn't construct fuel-efficient diesel engines. So Capt. Berger wants to repay his construction subsidy, with interest, and relinquish his right to operating subsidies. Then his ships will be able to transport Alaskan oil, where their competition will be mostly from older, smaller, less efficient U.S.-flag ships.
The money involved is not small potatoes. Apex says it would repay $407 million for construction subsidies and forgo $21 million a year in operating subsidies. That's a nice windfall even by the government's standards. And Apex claims that it would substantially reduce the cost of shipping Alaskan oil. Of course, Capt. Berger is not proposing to do all this as charity: he hopes to make lots of money off it. He is heartily opposed by those whose ships currently transport Alaskan oil. They fear that some of their ships will be run out of business. They warn of "the demise of the merchant marine, a crucial element in national defense." And they argue that the government would in effect be breaking its word by allowing Capt. Berger's subsidized ships to be transformed into unsubsidized ones.
We find it hard to see this as anything but a commercial dispute between several highly talented businessmen whose skills include capitalizing on extensive government regulations and subsidies. We look with skepticism on the Jones Act, which keeps foreign-flag ships off internal U.S. routes; on the law that restricts any sale of Alaskan oil to other nations; on construction subsidies; and on operating subsidies. In this case, Mrs. Dole should adopt the regulation Mr. Lewis proposed. The Treasury needs the cash, and consumers could stand the lower oil prices that would probably result from increased competition. We don't agree that the government has an obligation to protect existing shippers from competition, and we hope the Reagan administration will continue the work of dismantling the elaborate system of maritime subsidies and protections.