The US House of Representative is looking at a bi-partisan bill introduced on May 23 that will reduce fuel taxes on liquefied natural gas as a transportation fuel. It’s based on leveling the playing field for transportation fuel based on an energy equivalent basis. Currently, the federal highway excise tax on both diesel and LNG is set at 24.3 cents per gallon, but it takes about 1.7 gallons of LNG to equal the energy content of one gallon of diesel – 70% higher than diesel. The House bill changes the way LNG is taxed – from a volume (gallon) to an energy content (diesel gallon equivalent) basis.
Representatives Mac Thornberry (R-TX) and John Larson (D-CT) have introduced the “LNG Excise Tax Equalization Act of 2013” (H.R. 2202) in the U.S. House of Representatives. Senators Michael Bennet (D-CO) and Richard Burr (R-NC) will introduce a similar bill to the Senate when it returns from recess.
NGVAmerica issued a calculation in its press release on how to better understand the disparity under the current excise tax: “….a diesel truck traveling 100,000 miles per year at 5 miles per gallon consumes 20,000 gallons of diesel fuel. An identical LNG truck would require 34,000 gallons of LNG to travel the same distance. While the LNG truck uses a cleaner form of fuel, it would pay an additional $3,402 per year in taxes for using LNG.”