Southwest ships Texas jet fuel by boat to LA amid supply worries

• Southwest used a Jones Act waiver granted by President Trump in March 2026 to ship approximately one week's supply of jet fuel to LA when West Coast supply constraints were most severe
• Fuel costs have surged across the industry, with United Airlines reporting a $575 million increase in jet fuel costs for Q3 alone, prompting carriers to raise fares and scale back capacity growth
• West Coast jet fuel prices spiked and remain volatile due to the region's heavy reliance on imports, Iran war tensions, and export restrictions by other countries concerned about domestic supply

Summary: Southwest Airlines Ships Texas Jet Fuel to California Amid Supply Constraints

Southwest Airlines took unprecedented action this spring by chartering a barge to transport 12.6 million gallons of jet fuel from Houston to Los Angeles via the Panama Canal—a first for the Dallas-based carrier. The shipment, which arrived May 28, provided approximately one week's supply to the West Coast during a period of heightened supply concerns.

Key Drivers:

The move reflects extreme volatility in fuel markets following U.S. and Israeli strikes on Iran in February, which caused jet fuel prices to spike, particularly on the West Coast where reliance on imports is higher. Additional disruptions occurred in the Strait of Hormuz, a critical shipping channel, while countries restricted fuel exports due to shortage fears.

Financial Impact:

• Southwest's Q2 fuel expenses increased nearly $900 million year-over-year
• United Airlines reported a $575 million jet fuel cost increase for Q3 alone, translating to a $1.12 hit to adjusted earnings
• Southwest consumed 564 million gallons of jet fuel in Q2 for context

Regulatory Action:

Southwest utilized a Jones Act waiver granted by President Trump in March, which temporarily lifted requirements mandating U.S. ships for domestic port-to-port shipments as fuel prices soared.

Market Implications:

Airlines have scaled back capacity growth plans and raised fares in response to elevated fuel costs—their largest expense after labor. Executives report strong demand persists despite higher prices, which are expected to remain elevated through year-end. U.S. carriers largely abandoned fuel hedging over the past decade, leaving them exposed to current price volatility. Recent tensions with Iran in July have reignited fuel price concerns.