Is the America's Cup in Jeopardy?

San FranciscoBusiness Times reporter Eric Young reported October 27th, 2011 that U.S. Senator Dianne Feinstein (D-CA) introduced a bill to the Senate on 20 October 2011 to facilitate the America's Cup Match to occur in San Francisco in 2013. Senate bill 1759 basically saves the America's Cup from the prohibitive rules outlined in the Jones Act of 1920. Commendable for her to do this I think, considering it will be a huge windfall for the City of San Francisco and the State of California. This is an example of a Senator doing the right thing to help out her constituency. There is only one question I have, which by the way is intended to be very cynical. Why was the Jones Act not a problem from 1920 thru 1995, when the Americas Cup was hosted in United States Waters?

 I have read the Bills, S.1759 and H.R.3270 (the House of Representatives nearly identical version), and they seem rather harmless in the grand scheme of things. They are very limited in focus, and effect primarily support vessels for the event. I also re-read every piece of the Jones Act I could think of that might affect the event, and I don’t believe the bills are necessary. Primarily because the waiver authority for Jones Act regulation  already resides with several government agencies. 

They were read twice in their respective forums and will be up for discussion and the a vote. This is government efficiency, right? (Warning, I'm going to get cynical again.)So, my first question stands, why wasn't this a problem from 1920 thru 1995? The next question is, are we going to hear anything about this as it progresses? Answer: Probably not. Why do we care now. Let me think … oh yeah, its an election year next year. This would be a harmless feather in the cap of the good Senator on how her bill saved the America's Cup Event in San Francisco. A more sinister answer could be that since this is an "under the radar" bill (Her office didn't even issue a press release about it), how easy would it be to tack something more meaningful onto it?  I hope this is not the case.

Now, Senator Feinstein has done many things and has many accomplishments. Some of them I actually agree with and some of them (I believe) did more harm than good. I believe that she is doing what she feels is in the best interest of her constituency as well as our country (No I don’t think she's evil), however, I question the need for this Bill now, when the only thing it really threatens immediately is the San Diego America's Cup World Series Match beginning November 12th.

Introduction of this now will not only create panic for the organizers of the America's Cup and the World Series events, but it will open the door for a lot of confusion regarding the Jones Act, which has done pretty well for us since 1920.

Lets leave this fine event and its coverage to the Port Authority of San Francisco, the US Coast Guard, Immigrations  and Customs Enforcement (ICE), and the governing body of the America's Cup Event.  I for one think that this should remain a sporting event with a long and distinguished history dating back to 1851, before it became the America's Cup.

In August of 1851, a Schooner christened America raced against 15 other yachts in a 53 nautical mile regatta around the Isle of Wight. She finished 8 minutes ahead of the nearest rival. This is when its said Queen Victoria asked who was second and someone replied to her,"Ah, Your Majesty, there is no second."

Since 1857, the America's  Cup (newly renamed) has been a perpetual challenge trophy via Deed of Gift of the Americas Cup to the New York Yacht Club.

Politics were not involved in 1851, and should not be involved now. It’s a stretch (at the least) to say the Jones Act will interfere with the upcoming events and our politicians have more to worry about than a yacht race in San Diego or San Francisco.

How Significant is One Company?

It is not often that I write about a specific shipping company, however today I feel that this one is worth mentioning. There is more to this article than just one shipping company, there is a more important issue for people to think about. In a time where it is commonplace for companies to be "delisted" by the New York Stock Exchange (NYSE)  or the NASDAQ there is significance to the fact Horizon Lines was delisted from the NYSE.

What is it about Horizon that makes this so significant? The short answer is the Jones Act of 1920. Horizon lines is one of the largest Jones Act cargo carriers in business today. What the Jones Act does is restrict domestic cargo to U.S. manufactured, U.S. owned and U.S. crewed vessels for interstate cargo.

Horizon shares traded (at the time of writing this article) in the .24-.25 range, whereas in January, shares were trading at 52 week highs of 5.95. While I don’t believe this company is in serious trouble, its stock price has put its future in question.

If a foreign company were to come in and purchase this company, it would be one less Jones Act Carrier to become history. (Remember must be U.S. owned) This would mean, assets would be sold or moved and the remaining Jones Act Carriers would pick up the slack. Demand for shipping would go up, because there would be less supply. Prices would go up for shipping, and then eventually tacked on to the products each of us buys.

The government isn't helping either. Refer back to the blog article regarding the implementation of fuel usage fees on October 19, 2011. With the expansion of the definition of U.S. Waterways in the proposed fuel usage fees could in fact change the scope of the Jones Act.

The bottom lie is that if Horizon lines disappears from the list of Jones Act Carriers, it wouldn’t be the end of the shipping industry within the United States. However, there are many overlapping factors that get overlooked. If the operating costs are increased for carriers, companies that are struggling could be forced out of business. Because of the economic crisis, our elected officials are scratching their heads trying to uncover more funding. A fuel usage fee, or expansion of areas covered could give the government more funds to resolve the debt crisis. When a congressman, or senator or even the president says "this will provide millions if not billions" I submit that they have not researched the overarching effect to companies like Horizon who are struggling to come back from the last crisis caused by inappropriate legislation.

I'm thinking about this stuff, are you?

K.Swanson

Mechanical problem halts West Seattle water taxi runs.

Mechanical problem halts West Seattle water taxi runs

by KING5.com

KING5.com

Posted on October 28, 2011 at 5:51 PM

Updated today at 6:18 PM

The water taxi making runs between downtown and West Seattle was taken out of service Friday afternoon after it completed the 5:15 p.m. run, King County Metro said.

The crew of the Rachel Marie discovered a mechanical problem. The boat made it safely to West Seattle and was seen docked at the pier at Seacrest Park shortly after 5:30 p.m..

People aboard the 5:15 run reported smelling smoke and that the boat lost power and drifted for a short period of time.

The 5:45 p.m., 6:15 p.m., and 6:45 p.m. sailings from downtown have been canceled. The Vashon Water Taxi will take over the Rachel Marie's Route, leaving Pier 50 downtown around 7:45 p.m. The Vashon boat -- the Melissa Ann -- will work the West Seattle run through the weekend.

The Rachel Marie broke down last Sunday and was taken out of service for Monday's morning commute, West Seattle Blog noted in its reporting on Friday's mishap.

British Petroleum is Back!

By Ryan Tracy And Angel Gonzalez, The Wall Street Journal

WASHINGTON—BP PLC on Wednesday got permission to drill its first well in the Gulf of Mexico since the company’s massive oil spill there last year.

The decision was expected after the U.S. Interior Department approved the company’s broader plan for four exploratory wells in the Gulf late last week. It represents another milestone in the U.K. oil company’s efforts to return to the good graces of federal regulators since it lost control of a deep-water well after a blowout in April 2010. The incident killed 11 workers and caused the largest offshore oil spill in U.S. history.

The Interior Department said the company had met new safety requirements put in place since the spill and had adhered to voluntary standards that went beyond the agency’s requirements.

The approval comes a day after the U.K. oil company reported quarterly earnings of $5.3 billion, surpassing analyst expectations and boosting hopes that the company was emerging with renewed strength from one of the darkest—and costliest—periods of its history. The company had to shed billions of dollars in assets in order to pay for spill costs, while facing the wrath of U.S. legislators, environmental activists and the public.

“We have now reached a definite turning point,” Chief Executive Bob Dudley said in a statement Tuesday. “Our operations are regaining momentum and we are facing the future with great confidence.”

BP said Wednesday’s permit came “after several months of hard work developing and implementing our new drilling standards and sharing those standards with industry partners and regulators.”

The well is located about 246 miles south of Lafayette, La., and is part of BP’s Kaskida prospect. It will be drilled in 6,034 feet of water.

To demonstrate it could contain a blowout at the new well, BP contracted with the Marine Well Containment Co., an industry consortium formed after last year’s spill. The company maintains a “capping stack” that can be scrambled to the scene of a spill and is designed to contain an out-of-control well in deep water.

Environmental groups have questioned whether the new containment system can fulfill those claims, but federal regulators have endorsed it.

“This permit was approved only after thorough well design, blowout preventer, and containment capability reviews,” Michael Bromwich, director of the Interior Department’s Bureau of Safety and Environmental Enforcement, said Wednesday.

BP, one of the largest leaseholders in the U.S. Gulf and until the spill one of the most successful wildcatters there, can now join the flock of big oil and gas companies returning to the oil-rich area. On Tuesday, Hess Corp. said it was moving forward with the $2.3 billion development of the Tubular Bells deep-water oil and gas project in the Gulf—the helm of which it took over from BP in the wake of the Deepwater Horizon spill.

The Interior Department said it has approved permits for 46 deep-water wells since February, when a company first demonstrated it could contain a deep-water spill.
(c) 2011 Dow Jones & Company, Inc

Where are the Jobs?

In a recent Op-Ed piece for  The Wall Street Journal, Harold Ford Jr., wrote about several major projects which will provide several thousand jobs in various parts of the country.

 A brief listing of the projects he mentioned included:

• Two new build oil tankers in the Philadelphia Shipyard

• Alaska, 500 off-shore drilling leases to move forward

• New-York, Natural Gas drilling to commence after lifting Hydraulic Fracturing moratorium

• Ohio, new steel-mill to be built in  Youngstown

• Multi state pipeline project from  U.S. Gulf Coast to Canada

The main point that Mr. Ford was getting at in his Op-Ed is that thousands of jobs would be created if policies were lifted to allow it. These are real jobs being prevented from starting due to government red-tape.

 The politicians are continually posturing over how to fix the nations employment problem and in turn, fixing our economy.

I will say, that there are jobs out there. There are industries that are succeeding despite the downturn. Some of the jobs Mr. Ford  outlined in his comments are slightly more complicated than a simple "green light" from the Government. For instance, the Multi-state pipeline requires not only an "OK" from the EPA, but also from each of the states it passes through.

The fact that the two oil tanker builds in Philadelphia are pending is miraculous, considering Exxon could have taken the builds to Korea at half the cost. So in addition to authorizing these builds, I would suggest we take a hard look at how the Historic Philadelphia Shipyards received these contracts. Perhaps there's some value added element that has not been reported on yet, and other industries, who are losing jobs to Korea and China, could learn from.

There's a lot that can be done, and lifting government red-tape is only one step. We don’t necessarily support recent jobs bills, but we do believe that any jobs bill passed have elements that begin to lift regulations that hinder job creation.

(Mr. Ford, a former Democratic member of Congress from Tennessee, is a visiting professor at New York University.)

K. Swanson

New Fees for Inland Water Way Being Considered

As reported by Professional Mariner, Congress recently began considering an Inland Waterways Development Plan to improve the United States inland waterways transportation system and infrastructure over the next 20 years.

Agreed, the inland waterway system is in need of some major maintenance and upgrades, however the idea of another tax submitted under the radar of most media is a bit unsettling. The most troubling aspect, is that there have been numerous expenditures by the Federal Government earmarked for the "Nation's Infrastructure" that have funded projects such as wildlife repopulating, tunnels for turtles, beach erosion repair and countless others. The term "Shovel-ready" has been used a lot in the interest of political posturing with regards to the current unemployment situation.

I get the feeling that a six to nine cent increase per gallon of diesel assessed on commercial carriers may not seem like a big deal to a lot of people. I suggest we dissect what is happening here. First for every 1000 gallons of fuel sold to commercial carriers as a "user fee," this means a 90 dollar fee (tax). Commercial carriers use 10's of thousands of gallons of fuel per month. Next, they (the Government) is redefining the scope of what constitutes U.S. Waterways, more than doubling the covered area to include the Intercoastal Waterways (ICW). What's the big deal? The ICW commercial operators will now be assessed this fee, which means no matter the size of your boat, if you use it commercially you will pay this additional money.

The most important thing to remember about these fees charged to the commercial carriers are passed down to the end consumer. Costs of goods that are transported on the inland waterways as well as the intercoastal waterways will go up. Who's paying for the upgrades, not the commercial carrier, but the every American who struggles to pay for the goods they already buy.

I will end this by comparing this whole situation to the revision of banking regulations Early on, many critics said there would be unintended consequences. Two years later, everyone is up in arms about the fact banks are charging customers to use debit cards. (Most notably Bank of America.) I don't blame the banks, they are a business and are simply passing on the cost of operations to the consumers. Long story short, if you spend money on any product or service you will be contributing to this increased user fee for inland waterways and the expansion to cover the ICW.

K. Swanson

Mystery Bay Marine, LLC

Seattle Spill Seems Under Control

It is truly good news that the work crews have recovered the 75 foot boat that sank in west Seattle on Friday. Better news is that the environmental impact seems to be relatively small. While the crews were unable to completely recover the diesel fuel and other petroleum products released into the Puget Sound, at least one local news station reported that the oil sheen could not be seen at all in a "fly-over."

This is where it will get interesting. This is a very small (relatively speaking) accident. It has been reported that the company who operated the vessel will be receiving the bill for the clean-up. This is probably the best course of action. The question comes as to who will be "blamed" for the accident. W

We, the American people have a need to assign blame and then move on from there. Yes, its a tragedy - someone must be at fault - we have a name - OK now on to the next media generated crisis.


This article is about the small Seattle boat Sinking, why the big emphasis on blame? A little over a year ago, the Deepwater Horizon blew up, sank, and spilled hundreds of thousand of gallons of oil into the Gulf of Mexico. Who did we blame? That was easy, British Petroleum. Their name was on the rig, they started nobly paying the bill - problem solved. A year later, how many people know that several other contractors have been implicated in the spill. How many people that you know can name any of those other companies? Transocean; have you heard of them? Haliburton; did you know they have been cited? Most people would say no, it was all BP's fault.

Everyone who reads this might be asking if I'm ever going to get to a point. Yes, here it is - If your to quick to assign blame, your going to inevitably let someone who is guilty off the hook.

This is just a little food for thought.

Karl Swanson
Managing Member
Mystery Bay Marine, LLC

The environmental impact of a 75 foot LCM-8 which sank in Seattle is still being assessed. KING 5 did an excellent story covering the potential impact. Click here for the video.

People have already discussed who is going to pay for the clean up, and who might be to blame for the accident. I would reccomend worrying about cleaning up th spill firrst, and then worry about assigning blame later.

Thankfully, no one was injured in this sinking, and we commend the Coast Guard and the Seattle Fire Department for their speedy response.

Seattle Fire Dept. personnel move along the side of a barge as they deploy a containment boom at the site of a sunken 75-foot vessel Friday, Oct. 14 ,2011, in the Puget Sound off Seattle. Coast Guard Petty Officer Nathan Bradshaw says there are 300 gallons of diesel and 30 gallons of motor oil onboard the vessel in sealed tanks. The sinking was reported at about 8 a.m. while the vessel was tied to a barge about 300 yards off shore. There are no injuries. (AP Photo/Elaine Thompson)