Why are some U.S. fleets eager for winter? This summer’s big news for liquefied natural gas (LNG) means fleets running on the fuel will benefit beginning this winter. A new law in the United States was enacted to bring LNG excise taxes measured in line with diesel on an energy basis – using diesel gallon equivalents (DGE). The new law will effect January 1, 2016.
According to NGVAmerica, the “LNG fix” legislation will reduce LNG excise tax from approximately 41.3 cents per DGE, when it was taxed according to pure volume, to 24.3 cents per DGE.
Customers are not paying extra per gallon while not matched by energy (previously 17 cents more per gallon). This means that fleets previously paying tax on their LNG based on volume will now pay tax on DGE, or by energy, equalizing the fuel tax for diesel and LNG powered trucks in the fleet.
The provision also creates an equal measure for propane autogas (or LPG), to be measured in gasoline gallon equivalents (GGE). Compressed natural gas (CNG) is also aligned and taxed at gasoline gallon equivalents.
Westport believes LNG makes more sense as the fuel for longer-range and heavy-load Class 8 applications and that this tax change will shift demand in the direction of LNG for fleets in those applications.