U.S. Sens. Bill Cassidy (R-LA) and Todd Young (R-IN) on June 11 introduced bipartisan legislation that would eliminate the tax advantage that diesel fuel currently has over liquefied natural gas (LNG).
“Natural gas is a clean, domestic energy source that should be treated equally to gasoline and diesel,” Sen. Cassidy said. “We should be encouraging the use and production of LNG — benefiting the economy and workers in Louisiana.”
Sen. Cassidy sponsored the Waterway LNG Parity Act, S. 1774, with cosponsors Sen. Young and U.S. Sen. Michael Bennet (D-CO), which would amend the Internal Revenue Code of 1986 to change the Inland Waterways Trust Fund financing rate so that equal treatment within the federal tax code is provided to these fuel sources.
“The Waterway LNG Parity Act is a market-based fix for how we tax liquefied natural gas,” said Sen. Young. “The bill levels the playing field for this important alternative fuel source, which represents a growing sector of our economy.”
According to information provided by the senators, roughly 1.7 gallons of LNG provides the same amount of energy as a gallon of diesel. Because fuel usage is taxed on volume, LNG usage would be taxed 50 cents for the same amount of energy contained in a gallon of diesel fuel, which gets taxed at 29 cents.
This disparity under the current federal tax code disincentivizes the use of LNG, according to the information.
S. 1774 has been referred to the U.S. Senate Finance Committee for consideration.