Regarding the Excise Tax Levied on Liquefied Natural Gasby Senator Richard Burr
Posted on 2014-12-12
BURR. Madam President, I rise as a cosponsor of the amendment
from the Senator from Colorado. This amendment would correct a mistake
and level the transportation fuel tax playing field by taxing LNG on an
energy equivalent basis rather than a volumetric basis.
It would also put this cleaner and cheaper source of energy on an even playing field with diesel fuel. It would help a new industry get off the ground and become commercially viable simply by leveling the playing field.
When Congress first established the transportation fuel tax on LNG, it was not yet a fuel that had entered the commercial marketplace. There were no LNG trucks on the road. There was no one to educate us on the technical or marketing differences of these two fuels. Now that the LNG market is emerging, however, this unfortunate drafting error has shown its real world consequences.
The current tax system can result in thousands of dollars of additional tax for those who choose to utilize LNG. For example, if a diesel truck travels 100,000 miles at 5 miles per gallon it consumes 20,000 gallons of diesel fuel, however, an identical LNG truck would require 34,000 gallons of LNG to travel the same distance. Both trucks would consume the same amount of energy, measured in BTUs, but the current tax system would result in the LNG truck paying an additional $3,402 in taxes because of the 14,000 more gallons of liquid fuel consumed.
In addition, although we do not yet have any marine vessels operating in the U.S. on LNG, this too is an emerging market with great potential. High horsepower manufacturers are still developing the engines that will be needed to power vessels on LNG and we do not yet have a marine fuel sales infrastructure, but some ship owners are planning ship conversions or new orders that will allow them to utilize cleaner and cheaper natural gas fuel. We should not be raising a new obstacle for the marine industry by perpetuating this differential tax treatment on marine diesel fuel. Furthermore, there should be no scoring penalty from CBO or Joint Tax when we eventually get around to fixing the tax treatment of LNG versus diesel.
This is a commonsense proposal that allows diesel fuel and LNG to compete in the market fairly, opening doors for companies interested in switching to this environmentally friendly domestic energy source. We really need to find a way to fix this issue so that we can realize the economic and environmental benefits of the increased use of domestic natural gas.