US Energy Excise Tax Proposed Legislative Changes

By Jay BuchmanMichael HirschfeldMichael Lehmann, JD Supra Business Advisor. 

Federal excise taxes imposed on natural gas, propane and other alternative fuels can significantly add to their cost and can create a disincentive to their use compared with more traditional fuels such as diesel and gasoline, with the deterrent effect depending upon the level of such taxes. Legislation has recently been introduced in Congress that if enacted will serve to (i) reduce the excise taxes imposed on liquefied natural gas (LNG) and propane and (ii) make related changes to tax credits that are available to reduce these excise taxes. Such changes could affect the energy industry by benefitting the LNG and propane sector while simultaneously harming their competitor fuels such as diesel and gasoline. Congress will now undertake the difficult balancing act of determining if these proposed changes should be adopted wholesale, modified or rejected.