David R. Henderson  

The New Brownsville U-Turn

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I flew into the Corpus Christi airport late last night and waited in line for my rental car. Behind me was a young dark-skinned man who appeared to be from India and he was shouting in a foreign language--Hindi, I think--to another young dark-skinned man who was picking up their bags from the carousel.

I asked him what brought him to Corpus Christi. It didn't seem like the kind of place a young foreigner who, somehow, looked professional, would visit on a weekday in November.

My hunch was right. He said that he had flown in from Charlotte, North Carolina and that he and his friend were renting a car to drive down to Brownsville, Texas. The next day (today) they would cross into Mexico and renew their visas so they could return. "H1-B?" I asked. "Yes," he smiled. He told me that he needed to leave the United States to renew it. I wished him luck.

This is the new "Brownsville U-Turn." What was the old one? I recall reading a Fortune magazine article from the 1960s by one of Fortune's best economics writers: Gilbert Burck. In it, he showed how Eisenhower's restrictions on oil imports had led to what he called in the article "The Brownsville U-Turn." I don't recall all the details. What I do recall is that somehow some firms with oil from some countries could get around the quota restrictions b driving from Mexico to Brownsville (or was it Brownsville to Mexico?), literally taking a u-turn, and somehow getting the oil into the United States legally. Those transport costs were a deadweight loss. So were the transport costs borne last night and today by two young Indian men.

COMMENTS (7 to date)
Carl Edman writes:

Your recollection of the Brownsville U turn agrees with my (unresearched) recollection:

It is a hallmark of the sophisticated economic analysis underlying energy (and other) policy in the 1970s (and other decades) that the idea that the best response to the dislocations created by the Arab oil embargos was to impose another oil embargo on ourselves was universally hailed as a policy triumph.

The way this was implemented was a sales quota on oil. Domestic oil which was not part of the problem was of course exempt. So was--no unreasonably--oil from Canada and Mexico. The way this scheme was implemented was by imposing the quota only on oil imported via sea, but not via land.

One consequence of this cunning scheme was that Canadian and Mexican oil entering the U.S. via pipelines that crossed the U.S. border via pipelines under lakes was subject to quota. This effectively destroyed the value of these pipelines.

Another was the Brownsville U turn. Overseas oil traditionally entered the U.S. at Brownsville where there were the harboring facilities for oil tankers and the terminals for the pipelines leading to the U.S. refineries.

With the quota expensive and hard to come by, the natural response was the Brownsville U turn. Tankers of foreign oil would land at Brownsville, but instead of pumping the oil directly into the pipelines, it would instead be unloaded onto trucks. These trucks would then drive to the nearby Mexico border, cross it, turn around, go back to Brownsville and pump their now blessed over-land oil into the pipelines.

Pedro Albuquerque writes:

I had to do the H1-B Laredo U-Turn back in 2005, probably the most perfectly wasted day in my lifetime.

Mark Brophy writes:

U-turns to renew visas are common. I met people in Santiago, Chile who go to Mendoza, Argentina every 90 days, and have been doing it for years. Mexico and Canada avoid this problem by allowing tourists to stay 180 days. If Mexico ejected tourists every 90 days, many people would choose to pass winters in another country.

Max Marty writes:

I wonder how many airline customers are traveling due to some immigration renewal/restriction/issue like the one above vs how many are traveling for non-deadweight-cost reasons.

Yaakov writes:

Many years ago I knew a girl whose father worked in sending cars from Israel to Cyprus once a year so that they would be considered foreign cars and hence customs exempt. The cars would be loaded onto ships, sent to Cyprus and then brought back to Israel.

By the way, the sales tax in Israel on cars is still quite high. Despite that, I do not think the scheme is worthwhile nowadays or maybe it is just not legal.

ThomasH writes:

The visa U turn could be alleviated by allowing visas to be renewed/extended from within the country. I know may other countries do this by the US should not copy bad foreign examples.

jon writes:

What is the rational behind the U-turn visa anyway? I have had to do a few in my lifetime - I always tried to make it into a long weekend so I could at least get something out of it.

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