U.S. Legislation Lowers Tax on LNG

| USA, Newport Beach CA

Clean EnergyWithin the Highway Trust Fund legislation passed by both Houses of the U.S. Congress this week and expected to be signed by President Obama, is a provision to equalize the federal tax on liquefied natural gas (LNG) to an energy-equivalent basis with diesel and gasoline. Twenty-six State Legislatures have already taken similar action.

NGVAmerica explains that currently, fleets operating LNG-powered trucks are effectively taxed for their fuel at a rate 70 higher than that of diesel fuel. This is an unfair penalty on trucking fleets that use domestically produced LNG. The provision modifies the highway excise tax on LNG to be based on energy content, rather than volume, and thus brings the tax on LNG into parity with that of diesel.

“Passage of this legislation is great news for trucking fleets who are looking to clean-burning LNG to power their transportation needs,” said Matthew Godlewski, NGVAmerica President. “This common-sense change will mean even greater savings on their fuel costs, and it provides a powerful new economic incentive for those fleets considering the switch to this already low-priced, domestic fuel.”

This fix reduces the excise tax on LNG from approximately 41.3 cents per DGE to 24.3 cents per DGE. To illustrate the significance of the change, consider that a natural gas truck traveling 100,000 miles per year at 5 miles per DGE consumes 20,000 DGE per year.  Prior to the passage of the new law, the LNG truck would have a highway fuel tax bill of $8,262.  With this change, the LNG truck will now pay $4,860 a year in highway fuel taxes, a savings of $3,402 per year.

NGVAmerica members have commended the Congress for this action and acknowledged the leadership of Sens. Michael Bennet (D-CO) and Richard Burr (R-NC), as well as Reps. Mac Thornberry (R-TX) and Todd Young (R-IN) for seeing this key provision through.

The successful passage of this legislation has also been welcomed by president and CEO of Clean Energy Fuels Corp., Andrew Littlefair:

“The use of LNG as a transportation fuel continues to grow in heavy-duty trucks, locomotives and large ships because it burns cleaner and the price is reliably lower due to the fact that it originates from North America. Anyone who cares about a cleaner environment and energy independence should be very grateful for what the U.S. Congress did this week by making LNG that much more competitive as a transportation fuel of choice.”

Natural gas fuel costs up to $1.00 less than gasoline or diesel, depending on local market conditions, and also reduces greenhouse gas emissions up to 30% in light-duty vehicles and 23% in medium to heavy-duty vehicles. In addition, nearly all natural gas consumed in North America is produced domestically.

Clean Energy Fuels Corp. is the leading provider of natural gas fuel for transportation in North America and a long-standing sponsor member of NGV Global.

NGVAmerica is the national organization driving the use of natural gas as a clean, domestic, safe and abundant transportation fuel. It is also an Affiliated Association of NGV Global.

(Source: NGVAmerica and Clean Energy Fuels)

Print Friendly, PDF & Email