By Rick Roldan Propane users are in almost every congressional district in the United States. This fuel is an important part of America’s energy landscape, and that is why a bi-partisan group of congressmen led by Reps. Bob Latta, R-Ohio, and Tim Walz, D-Minn., have taken a leadership role in the creation of the Congressional Propane Caucus. This dedicated group of legislators is committed to addressing the infrastructure challenges facing America’s propane customers and ensuring that they can continue to rely on propane for their energy needs.
Especially during this time of year, propane is widely associated with backyard barbecues. However, its usage and value extend far beyond the backyard. Propane contributes $38.7 billion to America’s gross domestic product and provides nearly 50,000 domestic jobs. More than 50 million Americans choose propane for a variety of applications. Globally, propane is the third most prevalent vehicle fuel, and there are approximately 150,000 propane-powered vehicles in the United States.
Nationally, Americans consume about half of their propane at home, including furnaces, water heating and clothes drying. The rest is used in commercial, industrial and agricultural applications, and as an alternative fuel in vehicles, forklifts and lawnmowers. One of the growing areas of propane use is in fleet vehicles, specifically school buses and police cars.
As state budgets tighten, municipalities are looking for ways to save money and meet environmental standards. Propane as a vehicle fuel is an appealing choice because propane vehicles do not require new production, distribution or storage infrastructure because an extensive propane supply chain already exists for residential and commercial propane customers. Further, the incremental costs of converting a vehicle to propane are well below the equivalent vehicle and infrastructure costs for natural gas vehicles. Propane-powered vehicles are clean, emitting 11 percent fewer greenhouse gas emissions than gasoline vehicles throughout the vehicle life-cycle.
Last week, more than 200 members of the propane industry convened on Capitol Hill for Propane Days, (hosted by National Propane Gas Association), to advocate for policies that make it easier for states to adopt propane. Right now, there are a number of bills making their way through Congress that extend critical tax incentives and provide a level playing field for propane to compete with traditional fuels. HR 2517, the Powering American Jobs Act of 2015, would extend the 50 cent-per-gallon Alternative Fuel Credit and the Alternative Fuel Vehicle Refueling Property Credit. The uncertainty surrounding the status of these credits makes it difficult for all fleet operators, not just those who rely on propane, to choose alternative fuels.
Industry members also spoke to policy makers about balancing the excise tax rate between propane and gasoline. For example, a gasoline-powered truck using 20,000 gallons in a year would pay $3,660 in federal excise taxes. To obtain the equivalent energy content of 20,000 gallons of gasoline, a propane-powered truck would require 27,400 gallons of propane, resulting in $5,014 in federal excise taxes. That’s a 37 percent tax increase to go the same distance and clean the environment. For business owners and policy makers, this math doesn't add up. A similar law is already on the books for other alternative fuels. Standardizing the tax rate in this way makes it easier for every American to choose an abundant, domestic, and clean-burning fuel. HR 2517, HR 1665, and S 917 would all correct the imbalance that currently exists in the levying of the excise tax.
NPGA's members appreciated the opportunity to meet with their legislators last week to discuss the importance of these bills to our industry and customers. We urge Congress to take action on these important pieces of legislation. By addressing these important issues, the propane industry will continue to provide American citizens with a clean-burning, abundant, and domestically-produced fuel.
Rick Roldan is president & CEO of the National Propane Gas Association.
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