LNG tax bill gets Committee’s approval

The Senate Finance Committee approved a bipartisan bill introduced by U.S. Senators Michael Bennet and Richard Burr to put LNG on equal footing with diesel fuel under the federal highway excise tax.

The bill allows LNG to compete fairly with diesel by taxing LNG on energy output rather than per gallon, Senators said in a statement.

The current tax system for LNG can result in thousands of dollars of additional cost for companies choosing to use the fuel.

Previously, the excise tax rate for both LNG and Diesel Fuel was set at 24.3 cents per gallon, however, LNG produces less energy per gallon than diesel fuel. It takes about 1.7 gallons of LNG to equal the energy in 1 gallon of diesel fuel, resulting in LNG being taxed at 170% of the rate of diesel fuel on an energy equivalent basis.

Taxing LNG based on energy output versus volume removes a disincentive to use the fuel.

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