Industry Execs Tell Congress to Pass Nat-Gas Incentives

This story appears in the Dec. 8 print edition of Transport Topics.

Trucking and natural-gas industry leaders told a Senate energy committee that Congress could spur the transition from diesel to natural gas by changing the tax code, modifying weight restrictions on highways and encouraging creation of a fueling network.

“The lack of a national network of natural-gas stations is the leading obstacle facing natural-gas longhaul trucking,” said Robert Carrick, a sales manager for natural gas-powered vehicles at Daimler Trucks North America.

He said there are only about 100 stations offering liquefied natural gas, which is used for long distances. And there are about 1,500 compressed natural gas filling stations nationwide, but only about half are publicly available.

Carrick testified Dec. 3 before the Senate Finance Committee’s Subcommittee on Energy, Natural Resources and Infrastructure, which convened a hearing to explore how natural gas in the transportation sector could enhance national security and reduce greenhouse-gas emissions.

“Natural gas is, of course, the cleanest of all the fossil fuels . . . and we’ve got it, and the rest of the world wants it,” Finance Committee Chairman Ron Wyden (D-Ore.) said.

Another key move that would encourage natural-gas use would be to end the federal tax disparity that penalizes truckers using LNG versus those using diesel, witnesses said.

Mike Whitlatch, senior director of global energy and procurement for UPS, told the panel the tax disparity is a “bigger impediment” to buying LNG-powered trucks than the price differential between conventional diesel trucks and the more-expensive natural-gas trucks.

The federal tax on diesel is 24.4 cents a gallon. LNG has the same levy, but “a gallon of LNG produces only 58% of the energy produced from a gallon of diesel,” Whitlatch said.

Therefore, LNG is effectively taxed at 170% of the rate of diesel on an energy-equivalent basis, he said.

“The result is that the extra 17 cents per equivalent gallon for LNG adds up over the life of the truck to more than the extra initial cost of an LNG truck over a conventional diesel truck,” Whitlatch said.

Subcommittee Chairman Michael Bennet (D-Colo.) and two other senators, Orrin Hatch (R-Utah) and Richard Burr (R-N.C.), have introduced a bill to eliminate the LNG tax disparity. There also is a House bill, but neither chamber has acted.

CNG is taxed on its energy content.

Bills also are pending to accommodate the heavier natural-gas-fuel tanks. Most of the interstate system has an 80,000-pound weight limit, and natural-gas fuel tanks can add nearly 2,000 pounds to a truck.

The cost of natural-gas trucks and the federal excise tax also are hurdles for carriers considering transitioning from diesel to the alternative fuel, witnesses said.

“The incremental cost of a typical natural-gas truck is $45,000 to $60,000 [plus a 12% federal excise tax on all new truck sales] more expensive than a comparable truck with a conventional diesel engine,” Carrick said.

UPS’ Whitlatch said the carrier has 1,243 heavy tractors operating on LNG and CNG on highways.

“In fact, in 2014, the only new tractors that UPS is purchasing for its domestic, small-package delivery business will run on natural gas,” he said.

In addition to heavy tractors, UPS has more than 1,000 medium “package cars” operating solely on CNG.

The hearing was on the same day the House voted to renew for one year tax credits that have helped bolster the natural-gas industry but expired at the end of 2013.