April 7, 2026
Without a doubt, the highlight of the first quarter was Bad Bunny's halftime performance at the Super Bowl. It was 13 minutes in length and the first time a Super Bowl performance was entirely in Spanish.
The first quarter ended with the oil shock brought on by the war in Iran and the Middle East. While this should not impact Puerto Rico's long-term growth, it will most likely increase inflation in the second and third quarters, which will depress consumption.
While electricity is already expensive, rising oil prices worsen the situation because the island has limited renewable energy (about 6%) and depends on older oil plants. When crude oil prices rise, Puerto Rico feels the impact faster and more intensely than the mainland due to its heavy dependence on imported oil for both electricity and transportation.
As ship operators, our largest expense is the price of fuel. We witnessed the cost for Marine Gas Oil (MGO) increase from $695 per ton in early March to a price of $1,350 per ton last week. We had no choice but to establish an Emergency Bunker Surcharge to counter the spike in fuel prices.
Last week, President Trump waived the Jones Act as it relates to the shipment of energy in domestic U.S. trade, as evidence of the crisis.
Rest assured, as soon as we see the price of MGO return to the $650–$750 levels, we will suspend this surcharge.
While it is anyone's guess when things might normalize, it takes one just to look around the globe to see that a majority of the world is undergoing some type of strife. Ukraine, Russia, Lebanon, Iran, and the Arab Gulf States are all embroiled in war. Such unrest is directly related to commodity volatility, especially fuel.
Caribbean Stability
Closer to home, the stability in the Caribbean is also uncertain. After Venezuela, Cuba is on the verge of collapsing without the fuel to keep their lights on. Haiti is also in transition as the Kenyan peacekeeping force of 1,000 soldiers is being replaced by 5,000 United Nations peacekeepers.
Puerto Rico benefits from the unrest in the Caribbean as 5,000 troops have been stationed on the island. The U.S. Military is projected to spend $850 million in FY 2026 with a potential of $2B in total economic impact. This will lead to job creation of approximately 12,000 jobs, boosting local employment and GDP. Infrastructure upgrades tied to military operations will improve contracting opportunities. Closed since 2004, the U.S. has reopened Roosevelt Roads Naval Station as part of a broader Caribbean military buildup. Puerto Rico has been designated as the strategic hub for the Caribbean and South America.
Puerto Rico Economic Overview
Commercially, Puerto Rico remains stable. Bolstered by manufacturing and tourism, these sectors help offset weaknesses elsewhere but are vulnerable to energy reliability issues.
GDP Growth
2.2%
Inflation
2%
Unemployment
5.5%
Population
3.2M
Energy Infrastructure Overhaul
This year Puerto Rico's electric grid is undergoing a critical infrastructure makeover — a shift in federal funding priorities toward immediate generation repairs and significant expansions in battery storage capacity. The Department of Energy (DOE) renewed emergency orders in February, authorizing the dispatch of essential generation units to combat storm-related outages.
This year, LUMA is delivering 89 new transformers to replace units that are up to 70 years old. Efforts include deploying automated switchgear and fault sensors to provide real-time location data, which significantly reduces the time needed for service restoration. Targeted repairs are occurring in high-impact areas, such as Old San Juan, to support the local economy and tourism.
Major Policy Shift
The DOE redirected $365 million earmarked for solar and sustainable energy toward practical fixes for the island's centralized generation assets — prioritizing immediate grid stabilization for 3.2 million residents rather than long-term solar installations benefiting approximately 30,000 low-income families. Puerto Rico officials have also initiated legal processes to potentially replace LUMA Energy as the grid operator by the end of 2026.
Hundreds of Tesla Battery Packs have arrived and are ready for installation across the island. These lithium-ion battery systems will stabilize the grid by absorbing excess electricity and releasing it during peak demand. The battery packs can store electricity generated from fossil fuels, solar farms, and wind turbines alike — and Tesla explicitly positions its Megapacks to help transition grids away from fossil fuels toward sustainable energy over time.
The second quarter is poised to be volatile and unpredictable.
Sincerely,
Torey Presti
President, National Shipping of America
