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Measure to Correct the LNG Tax Inequity Introduced in U.S. Senate

This week, Senators Michael Bennet (D-CO) and Richard Burr (R-NC) introduced legislation (S. 344) to create a level playing field for LNG to compete with diesel as a transportation fuel on our nation’s highways. The federal highway excise tax on both diesel and LNG is set at 24.3 cents per gallon. However, it takes about 1.7 gallons of LNG to equal the same energy content as one gallon of diesel. As a result, LNG is taxed at a rate 70 percent higher than diesel on an energy equivalent basis. This disparity creates a significant disincentive for the use of LNG. The introduced legislation would correct this disparity by taxing LNG on an energy equivalency, rather than volumetric basis.