A provision allowing liquefied natural gas to be taxed equally with diesel fuel was passed by the Senate as part of the three-month highway bill patch. The bill is expected to be signed into law by President Obama.
The provision will cause LNG and propane autogas to be taxed based on energy content rather than by volume the way diesel fuel is. Because a gallon of LNG or propane is less energy efficient than diesel fuel, fleets operating LNG-powered trucks were being effectively taxed for fuel at a much higher rate.
Organizations such as NGVAmerica said that this was an unfair penalty on trucking fleets that used domestically produced LNG.
The provision modifies the highway excise tax on LNG and propane so that it wil be based on a diesel gallon equivalent, starting on Jan. 1, 2016.
The change will reduce excise tax on LNG fuel from about 41.3 cents per DGE to 24.3 cents per DGE, according to NGVAmerica.
“Passage of this legislation is great news for trucking fleets who are looking to clean-burning LNG to power their transportation needs,” said Matthew Godlewski, NGVAmerica president. “This common-sense change will mean even greater savings on their fuel costs, and it provides a powerful new economic incentive for those fleets considering the switch to this already low-priced, domestic fuel.”