Tuesday, September 29, 2015

Are fuel taxes equal for all fuels?

Question of the Month: Are fuel taxes equal for all fuels?

Answer: In theory, if all motor fuels were taxed equitably it would ensure tax consistency among jurisdictions and reduce consumer burdens. In practice, motor fuel taxes vary widely between jurisdictions and across fuel types. This is largely because federal and some state highway excise taxes are based on volume, not on energy content, resulting in significant tax inequity among fuels. As discussed in the July and August Questions of the Month, motor fuel taxes are used to fund transportation infrastructure. The number of vehicle miles traveled on a specific amount of fuel is linked to the amount of energy in the fuel. Therefore, energy content provides a more accurate measure of a vehicle’s impact on a roadway.

Before we go any further, let’s make sure you understand some basic keywords and phrases regarding energy content:
  • BTU: British thermal units, or the unit of measure to show an amount of energy.
  • Heating value: A measure of energy content in BTUs, which represents the amount of heat released during combustion. Typically, we use the lower heating value when comparing fuels.
  • Gasoline gallon equivalent (GGE): The amount of fuel that has the equivalent energy to a gallon of gasoline. Similarly, diesel gallon equivalent (DGE) is the amount of fuel that has the equivalent energy to a gallon of diesel. GGE is used for alternative fuels that typically replace gasoline (e.g., ethanol), whereas DGE is used to measure fuels that replace diesel (e.g., liquefied natural gas, or LNG).

Federal Excise Taxes
Last month, the President signed H.R.3236 (Public Law 114-41), the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which assesses the federal fuel excise tax levied against LNG and propane on a Btu basis relative to diesel and gasoline, respectively, beginning on January 1, 2016. Compressed natural gas (CNG) is already taxed based on an energy content basis relative to gasoline. Prior to Public Law 114-41, the federal excise taxes for LNG and propane were higher than the conventional fuel counterpart. This is still the case for biodiesel and ethanol, leaving these fuels at a tax disadvantage compared to diesel and gasoline, respectively.

State Excise Taxes
Motor fuel tax variations within and between states are even more complex. Many states have some of the same tax equity issues that we see at the federal level. Plus, there are many different fuel definitions and measures, which create an undue burden for interstate fleets that must comply with the International Fuel Tax Agreement. For example, only some states tax CNG and LNG on a GGE or DGE basis. Though a number of states are currently evaluating legislative proposals to tax fuels this way, others states are waiting for a decision by the National Conference on Weights and Measures (NCWM). And if NCWM does adopt a standard, states will still have to individually adopt the standard into their laws or regulations before it can be implemented.

Taxes on Electricity as a Transportation Fuel
Other motor fuels, such as electricity and hydrogen, do not have federal excise tax requirements. Although plug-in electric vehicles (PEVs) and fuel cell electric vehicles (FCEVs) currently represent a very small portion of the total vehicle population, it is likely PEV and FCEV registrations will continue to grow in coming years. Any effort to collect taxes on electricity to pay for highway infrastructure would need to account for the fact that PEVs are capable of fueling at home. In addition, some plug-in hybrid electric vehicle owners pay taxes on their gasoline use. Making the situation even more complicated, electricity is already taxed in ways not tied to highway funding. Some states have implemented annual PEV fees through registration or vehicle decal programs to account for lost revenue from motor fuel taxes, which we discussed in the August Question of the Month.

Refer to the following for more information on motor fuel taxes:

Clean Cities Technical Response Service Team

Friday, September 11, 2015

Idling Reduction

From Energy.gov:
Are you looking for resources to start an anti-idling program at your child's school? Now that school is back in session, parents concerned about emissions from idling school buses and the associated cost of wasted fuel have many places to find materials to launch a campaign.

A good place to start is the U.S. Environmental Protection Agency Region 8's website, "Idle Free Schools." This site explains what goes into a well thought-out program and where to find materials. In addition, it includes links to other successful programs. In designing a program, be aware of any state or local restrictions on school-bus idling. (Clean Cities' IdleBase spreadsheet is a valuable resource on idling laws and ordinances.)

The cost of fuel wasted by idling school buses is another reason to reduce idling. The chart below shows the savings possible with the reduced idling of just one bus. (The chart reflects fuel savings alone; it does not include savings on maintenance costs due to reduced engine-on time.)

Annual Savings From Idling Reduction For One School Bus

If your time and financial resources don't allow you to undertake a full-blown idling-reduction program, you can find a whole host of idling reduction signs by searching "school bus idling reduction."

Finally, keep in mind that it's not just idling school buses that affect air quality near schools. Those dropping off and picking up students can help keep the air clean by not idling while stationary.

Please let us know about any efforts you undertake.

Terry M. Levinson, Editor
Allegheny Science & Technology

"The Economics of Natural Gas Vehicles"

"Natural gas prices, while historically volatile, have become a bit more predictable since the shale gas revolution took hold. These prices are expected to remain relatively stable for years to come, while oil prices constantly go up and down." "The U.S. Energy Information Administration projects that natural gas will cost $1 to $2 less than diesel and gasoline for many years to come."

Factors to consider when choosing natural gas vehicles:
  • Higher Acquisition Costs
  • Reduced Spending on Fuel
  • Similar Maintenance Spending
  • Effective Depreciation Costs
  • Leasing Costs