Bill introduced to adjust LNG tax rate

Two U.S. representatives have introduced a bill aimed at equalizing federal fuel taxes between diesel fuel and liquefied natural gas (LNG). The bill, the “LNG Excise Tax Equalization Act of 2013” (H.R. 2202), was introduced into the U.S. House of Representatives by Rep. Mac Thornberry (R-TX) and John Larson (D-CT). Sen. Michael Bennet (D-CO) and Sen. Richard Burr (R-NC) will introduce a similar bill to the Senate when it returns from recess.  

H.R. 2202 would adjust the federal highway excise tax on LNG to make it equal to that of diesel fuel. According to NGVAmerica, both diesel and LNG are taxed at 24.3 cents per gallon. Because it takes 1.7 gals. of LNG to equal the energy content of a gallon of diesel, the result is a tax rate that is 70% higher for LNG, the organization said.

The legislation changes the way LNG is taxed from a volume (gallon) to an energy content (diesel gallon equivalent) basis.

“We commend Reps. Thornberry and Larson for this common-sense measure that will help reduce reliance on foreign oil and accelerate the switch to domestic natural gas,” said Richard Kolodziej, NGVAmerica president.

According to NGVAmerica, a truck that travels 100,000 mi. a year at 5 mpg that consumes 20,000 gals. of diesel would pay $3,402 per year less in taxes than that same truck powered by LNG.

“This bill provides a fair, market-centered solution to fix the tax disparity between diesel and LNG,” said Thornberry. “I think this change will encourage more private sector investment in LNG infrastructure and production, and that will be a real positive effect on our economy.”

Six states have already passed bills that change the LNG tax to an energy equivalent basis, NGVAmerica said.

“The state leadership on this issue has really helped, and we are pleased to see the Congress moving in the same direction,” said Kolodziej.

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