Tax Treatment of LNG Sees Congressional Action

U.S. Rep. Mac Thornberry, R-Texas, has introduced a bill aimed at setting the excise tax on liquefied natural gas (LNG) to reflect the fuel's actual energy output – a measure that has been on the wish lists of many natural gas vehicle industry stakeholders.

The federal excise tax on both LNG and diesel is currently 24.3 cents per gallon, but it takes 1.7 gallons of LNG to produce the same amount of energy that a gallon of diesel produces. So, in effect, LNG is taxed at a rate that is 70% higher than that of diesel. Both gasoline and compressed natural gas (CNG) are taxed according to energy output, leaving LNG as the outlier.

Thornberry's bill, the ‘LNG Excise Tax Equalization Act of 2013’ (H.R.2202), seeks to ‘level the playing field.’

‘This bill provides a fair, market-centered solution to fix the tax disparity between diesel and LNG,’ Thornberry said. ‘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.’

A companion bill is expected to be introduced in the U.S. Senate by Sens. Michael Bennet, D-Colo., and Richard Burr, R-N.C.

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