Fuelin' around

Congress is expected to pass some kind of energy legislation this fall. But will the bill make any difference in the supply or cost of truckers' fuel, or are the politicians just fuelin' er, foolin' around? Early indications point both ways. The portion of the bill produced by the House Ways and Means Committee has 39 count 'em tax provisions. A few might make a difference. For instance, all refiners

Congress is expected to pass some kind of energy legislation this fall. But will the bill make any difference in the supply or cost of truckers' fuel, or are the politicians just fuelin' — er, foolin' — around?

Early indications point both ways. The portion of the bill produced by the House Ways and Means Committee has 39 — count 'em — tax provisions. A few might make a difference.

For instance, all refiners would be allowed to depreciate the cost of their equipment over seven years instead of ten. Small refiners would get two additional breaks to help with the cost of equipment that will be required in the next few years to remove sulfur from diesel under rules adopted by the Environmental Protection Agency (EPA). They would get to expense (immediately deduct) three-quarters of the costs of complying, and they would get a 5¢/gal. credit for producing low-sulfur diesel fuel. These changes could bring down the cost of low-sulfur diesel and encourage more small refiners to stay in business. That, in turn, could make a big difference to supply in certain markets.

Another provision has an outside chance of helping. The bill would lower the tax rate on diesel fuel blended with at least 14% water at 19.7¢/gal. instead of the 24.3¢/gal. rate that applies to full-bodied diesel. (Both fuels also are subject to an added 0.1¢ tax for the Leaking Underground Storage Tank Trust Fund.) Congressional staff assume so little fuel would qualify that the revenue loss would be close to zero, but the slight tax break could help if anyone can make blended fuel work.

A variety of other provisions might help indirectly by encouraging more oil exploration or development of alternative fuels and vehicles, thereby reducing demand for petroleum products and leaving more to be turned into diesel fuel for trucks.

But one measure actually goes in the other direction: the bill would remove the 4.3¢ fuel tax on diesel fuel used in trains and tugboats, while leaving it in place on highway fuels. The cutback would happen at glacial speed — just a 1¢ reduction through 2004, with total repeal delayed until 2010. Nevertheless, the change shows that some members of Congress are more interested in helping certain constituents than in being consistent about boosting energy production and conservation.

A more alarming sign that neither the Bush Administration nor Congress is fully serious about energy supply comes in the case of the California ethanol exemption — there is none. After the gasoline additive MTBE was found to be leaking into California water systems, the state banned it. Clean-air rules require that ethanol be added to gasoline instead, even though there is doubt whether enough ethanol is available to meet the state's demand. Because of those doubts (and doubts that ethanol is a net benefit to air pollution), the state applied for a waiver from the requirement but was turned down by the EPA. The House of Representatives also rejected an attempt by California members to legislate a waiver. As a result, the state could be in for significant price spikes and supply disruptions — again.

The bottom line: Congress has a lot to do before quitting for the year in a few weeks. Falling estimates of the surplus available for new tax breaks, along with falling oil prices, may mean that energy legislation will not be sent to the President until next year, if ever.

Therefore, truck owners should probably make decisions about current and future fuel purchasing, as well as longer-term decisions about what type of truck to buy and how long to keep it, on the assumption that legislation isn't going to change those economics anytime soon.

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