Fuel Taxes

S&P Warning of European Credit Ratings Results in Decline in Diesel, Stall in Oil Prices

Tuesday, December 6, 2011 by Transportation Lawyer

Over the past week, national average diesel prices dropped 3.3 cents, according to the Department of Energy ("DOE"). The DOE's weekly price survey for the week of Dec. 5 shows diesel sitting at $3.931 per gallon, which will make for the second consecutive decline for diesel fuel. The decline is on the heels of last week's 4.6-cent drop reported by DOE. Diesel is now 4.4 cents a gallon higher than it was a month ago, and 73.4 cents dearer that it was this week a year ago.

The DOE says the national average price for gasoline is now at $3.29 a gallon, nearly two cents a gallon less than it was a week ago.

Meanwhile, benchmark crude oil dropped $2 per barrel in afternoon trading on Monday after rising as high as $102.44. The benchmark price ended the day about where it began, at $100.99 per barrel, up just 3 cents.

Oil prices gave up gains made earlier in the day on news that Standard & Poors could downgrade credit ratings for the wealthiest nations in Europe. Germany, France, the Netherlands, Austria, Finland, and Luxembourg are on notice that Standards & Poor is reviewing the countries' credit worthiness. Each has a one-in-two chance of a downgrade in the next 90 days, the newspaper said.

Additionally, while U.S. deals with high unemployment and slow growth, emerging-market economies are growing strongly, buying fuel by the shipload.

U.S. customers have been pulling back in part because an anemic economic recovery has left millions still looking for work. For example, in this past August U.S. drivers burned 7.7% less gasoline than four years earlier, when gasoline usage peaked.

But U.S. drivers aren't seeing much benefit in the form of lower prices because refineries on the Gulf Coast are shipping much of their output to places outside the region where the demand is higher, keeping prices high.

On-Highway Diesel Prices by Region
(Self Service Cash Price in Dollars per Gallon, Including Taxes)

East Coast: 3.934
New England: 4.036
Central Atlantic: 4.018
Lower Atlantic: 3.862
Midwest: 3.907
Gulf Coast: 3.828
Rocky Mountain: 4.035
West Coast: 4.105
California: 4.172

The national average price in Canada for the week of Nov. 29 - Dec. 5, as reported by MJ Ervin & Associates, was 132.5 per liter ($4.996/USgal), down 1.6 cents per liter from the previous week. Whitehorse, Yukon had the highest price at 146.4 per liter ($5.541 US), while Calgary, Alta. Posted the lowest price in the land at 122.9 ($4.651 US).

Senates Introduces Its Version of the NAT GAS Act

Thursday, November 17, 2011 by Transportation Lawyer

The Senate introduced the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act of 2011, similar to the House bill by the same name, which would extend tax credits for building fueling stations.

To fund the tax credits, the Senate's NAT GAS Act would impose a funding fee. The House version lacked this type of funding provision. The bill provides that in order offset costs, a user fee would be imposed on the sale of liquefied natural gas and compressed natural gas sold for use as a motor vehicle fuel.

The Senate bill is sponsored by Senators Robert Menendez (D-N.J.), Richard Burr (R-N.C.), Saxby Chambliss (R-Ga.) and Majority Leader Harry Reid (D-Nev.).

Tax credits listed in the Senate bill would run through 2016 and, like the House bill, would be worth up to $7,500 for the purchase of a natural gas-fueled car and up to $64,000 for a heavy truck. Producers of such vehicles would also get a tax credit. The current excise tax credit of 50 cents per gallon for producers of natural gas motor fuel would be extended through 2016.

Credits for building natural gas fueling stations would rise from the current 30% to 50% of a station's cost, or up to $100,000, under the House bill. The Senate bill also encourages investment in fueling stations, but the exact amount was not known last night.

Georgia's Special Session Addresses Transportation Isssues

Wednesday, August 31, 2011 by Transportation Lawyer

During the second week of Georgia's special session, the generally assembly is expected to discuss laws that could freeze the tax collected on fuel purchases, along with address a proposed transportation tax vote.

Georgia’s fuel tax is a two-part tax. A 4 percent portion of the tax is calculated twice per year and is based on the average price per gallon of fuel in the state at the time. The rate can change every six months on Jan. 1 and July 1. Gov. Nathan Deal decided in June to freeze the state’s fuel taxes to help consumers avoid more pain at the pump. The tax rates were slated to increase the first of July.

As required by state law, lawmakers must ratify the freeze through passage of a bill – HB2EX.

Also moving through the statehouse is the bill – HB3EX – that addresses regional transportation referendums.

The referendums would add a 1-cent sales tax to pay for transportation projects. The governor wants to push back votes from the 2012 presidential primary ballot on July 31 to the Nov. 6 general election.

Biodiesel Production At Record Levels

Wednesday, August 24, 2011 by Transportation Lawyer

U.S. biodiesel production reached a new monthly high in June of 81 million gallons, marking a third consecutive month of record volumes. Biodiesel production in the first half of 2011 has already eclipsed production for all of 2010.

The new EPA statistics come after Congress reinstated the biodiesel tax incentive this year.

Despite the weak economy, the biodiesel industry is on track to produce at least 800 million gallons this year, more than double biodiesel production of 315 million gallons last year, when Congress allowed the biodiesel tax incentive to temporarily lapse.

Since the introduction of the $1-per-gallon biodiesel tax credit in 2005, U.S. biodiesel production climbed steadily until 2010, when Congress allowed it to lapse temporarily as the health care debate overshadowed other issues. Production immediately plummeted from a record of about 700 million gallons in 2008 to about 315 million gallons in 2010.

Congress reinstated the tax incentive in December 2010 and the EPA included biodiesel as an Advanced Biofuel in its new Renewable Fuels Program (RFS2), requiring minimum volumes of biodiesel use in U.S. fuels. In the first six months of this year, U.S. biodiesel production already has exceeded 375 million gallons. The tax credit is again slated to expire in December of this year.

2011 NAT GAS Act introduced to House

Friday, April 8, 2011 by Transportation Lawyer

On Wednesday, the New Alternative Transportation to Give Americans Solutions of 2011, or NAT GAS, Act, was introduced to provide incentives for the use of natural gas as a vehicle fuel, the purchase of natural-gas-fueled vehicles, and the installation of natural gas vehicle refueling infrastructure.

The bill was introduced by Representatives John Sullivan, R-Okla., Dan Boren, D-Okla., John Larson, D-Conn., and Kevin Brady, R-Texas. The bill had 76 original co-sponsors when it was introduced.

The five-year bill is a targeted jump-start for natural gas penetration into the vehicle market.

Bill sponsors stressed the fact the bill does not provide subsidies, nor does it choose a particular technology, but only provides tax credits. The bill's intention is to create a basis on which long-term energy policy can be built.

The proposed legislation focuses on heavy-duty trucks, both urban and over-the-road. The bill also provides tax incentives for passenger vehicles as well as home refueling stations.

Specifically, provisions include:

- A tax credit for up to 80 percent of the incremental cost of buying a natural gas vehicle, with a maximum value ranging from $7,500 for a light-duty passenger vehicle to $64,000 for the heaviest trucks. Bi-fuel and dual-fuel vehicles are permitted.

- A 50-cent-per-gallon fuel tax credit that is in place in 2011.

- An infrastructure tax credit of 50 percent of the cost up to a maximum tax credit of $100,000 per station. For stations built in 2011, there is an existing infrastructure tax credit of 30 percent with a maximum credit of $30,000. This credit would also extend to home refueling units, where purchases would be eligible for a $2,000 tax credit.

- A tax credit to the manufacturer for the production of natural gas vehicles. The bill also includes other provisions that will facilitate the production and use of natural gas vehicles.

The NAT GAS Act has received strong bipartisan support during a bitterly partisan budget fight. Both President Obama and Speaker of the House John Boehner have expressed their support for the bill. In the face of fuel prices which could top $5 per gallon later this year, the bill could potentially be signed into law by this summer.

Virginia's road plan moves forward

Thursday, February 10, 2011 by Transportation Lawyer

Friday, Feb. 4, the Virginia House endorsed Gov. Bob McDonnell’s $4 billion transportation plan, which now advances to the Senate.

The bill includes borrowing about $3 billion during the next three years. Another $1 billion in available cash would be used to pay for up to 900 projects.

The governor’s proposal represents what could be the largest one-time state infusion of money into transportation since the Virginia fuel tax was increased in 1986.

Nearly $1.8 billion of the proposed debt relies solely on state revenue. About $1.1 billion would be repaid using a portion of federal highway funds the state gets each year.

Critics of the plan say the state should not undertake new debt to get road work done. At the same time, many detractors acknowledge that something needs to be done about the state’s transportation system.

The bill – HB2527 – represents the biggest chunk of the McDonnell’s overall transportation proposals.

One component of the governor’s agenda has already advanced from the House to the Senate. A proposed constitutional amendment is sought to protect the state’s transportation fund.

Sponsored by Delegate Glenn Oder, R-Newport News, the measure – HJ511 – would protect the fund from transfers to the general fund.

A separate component of the governor’s agenda has been rejected. HB2404 called for taking $100 million of sales tax revenue collected in Northern Virginia each year and applying it to road and transit projects. Another $50 million in tax revenue in Hampton Roads would have been added.

CA Resources Board Approves Cap-n-Trade Program

Monday, December 20, 2010 by Transportation Lawyer

The California Air Resources Board endorsed a cap-and-trade program that will eventually set limits on emissions by transportation fuels.

The regulation, which still is in progress, will begin to take effect in 2012 with industrial sources of greenhouse gas emissions, such as utilities, and then expand in 2015 to include distributors of transportation fuels.

The move comes as the U.S. Congress has backed away from a national cap-and-trade program - a program that was resisted by business interests in general and trucking in particular on grounds that it amounts to a tax on energy. As the rulemaking proceeds, trucking interests will want to know the impact of possible price differentials between fuel purchased in California and in other states.

Indiana Public Transportation Sales Tax Exemption Requirements

Tuesday, June 15, 2010 by Transportation Lawyer

The Indiana Department of Revenue updated its Public Transportation Information Bulletin #12 (effective July 1, 2010) with a new section II to clarify the factors necessary for a trucking company to qualify for a sales and use tax exemption on trucking-related purchases, e.g. vehicles, repair parts and fuel. Although a number of the factors are directed specifically at a trucking company that serves a parent company, any trucking company that claims the exemption should review its operations for compliance with the factors set forth in Information Bulletin #12, which can be accessed at http://www.in.gov/dor/reference/files/sib12.pdf).