US Senators Seek to Levelise LNG Fuel Tax

Three US senators said June 11 they had reintroduced bi-partisan legislation that would ensure excise taxes levied on LNG used as fuel in marine transportation on inland waterways were consistent with taxes applied to gasoline and diesel fuel.

The Waterway LNG Parity Act, reintroduced by Republican senators Bill Cassidy of Louisiana and Todd Young of Indiana and Democrat senator Michael Bennet of Colorado would account for the lower energy density of LNG relative to diesel.

About 1.7 gallons of LNG are needed to provide the same amount of energy as one gallon of diesel, but because fuel is taxed on volume and not energy content, a gallon of LNG attracts an excise tax of $0.50 while a gallon of diesel is taxed at $0.29.

Although LNG is a cleaner fuel than diesel or gasoline, the senators say the current application of the excise tax disincentivises its use.

“Natural gas is a clean, domestic energy source that should be treated equally to gasoline and diesel,” Cassidy said. “We should be encouraging the use and production of LNG.”

The LNG fuel and natural gas vehicle industries applauded the move, saying LNG in marine, rail and road transportation applications represents a “win” for the environment and is more economical than diesel or gasoline.

“LNG is domestic, clean, and abundant, ensuring that marine operators have decades of affordable fuel that produces near zero sulfur oxide emissions and significantly reduces particulate matter and nitrogen oxides,” NGVAmerica president Dan Gage said.