SBA backs tax incentives for low-sulfur diesel producers

The Office of Advocacy for the Small Business Administration (SBA) is backing an array of tax incentives for small oil refiners to help them comply with the EPA's 2006 low-sulfur diesel production mandates. The EPA is allowing small refiners to stagger compliance the regulations, said SBA. However, even with a staggered phase-in, small refiners face increased costs when the grace period ends. The

The Office of Advocacy for the Small Business Administration (SBA) is backing an array of tax incentives for small oil refiners to help them comply with the EPA's 2006 low-sulfur diesel production mandates.

The EPA is allowing small refiners to stagger compliance the regulations, said SBA. However, even with a staggered phase-in, small refiners face increased costs when the grace period ends. The SBA said small refiners make up 5% of U.S. refining capacity and if they are forced to shut down, the cost of diesel fuel could rise 10%. Such a rise in diesel fuel costs would cost American consumers nearly $51 billion over the next 10 years, the SBA said.

Low-sulfur diesel has a sulfur content of 15 parts per million (ppm) versus the 500 ppm found currently in diesel. The lower amount of sulfur is critical to reaching reduced emission targets for diesel truck engines that go into effect in 2007. The SBA added that federal revenues would not be affected severely if small refiners get tax incentives for low-sulfiur diesel production -- with tax revenues decreasing only $57 million over 10 years.

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