Feb. 8, 2016 SIGN IN | REGISTER

Propane Industry Prepares to Battle to Protect Its Tax Breaks

Bill Clark/CQ Roll Call File Photo
Wyden, who serves as chairman of the Energy and Natural Resources Committee, has said the stop-and-start nature of many energy tax incentives must change.

Propane vehicles took off during the 1970s oil embargo, but their rate of adoption dropped along with oil prices in the succeeding decades, the propane association’s spokeswoman Mollie K. O’Dell.

As supplies have grown with the domestic shale gas boom, she said, it is now more economical to expand propane use to other engine technologies.

Propane industry lobbyists want to see their fuel applied to any technology using an internal combustion engine, including agricultural pumping, combined heat-and-power systems and commercial lawn mowing.

“Our goal in propane being viewed similar to natural gas is for consumers to know that propane can power the same applications that natural gas can,” O’Dell said.

ICF projects modest growth in demand for propane in the years ahead, largely because of market penetration of new propane engine technologies and propane-fueled vehicles. The consulting firm expects that spike to be tempered, though, by continued improvements to the energy efficiency of appliances and buildings.

Providing tax benefits for gasoline alternatives would help shift some of the market momentum toward fuels such as natural gas and propane that have dropped in price but require expensive technology to utilize, said ICF analyst Michael Sloan.

“Because it’s a very small market right now, there’s not a lot of infrastructure and a relatively limited number of vehicles available for both natural gas and propane, which means that the buyers are not really aware yet of what the economic advantages for the fuel for transportation could be,” he said.

Like most stakeholders eyeing the possible tax code overhaul, the propane association wants a multiyear extension of its benefits to give the industry the time and stability to take advantage of them, Squair said. That means propane boosters will be competing in the fight to extend tax breaks with lobbyists for other niche energy sources, while also trying to fend off efforts by free-market conservatives to eliminate energy tax incentives entirely.

It remains unclear whether a tax overhaul effort will crystallize in the next few months, but Oregon Democrat Ron Wyden, a Senate tax writer who serves as Energy and Natural Resources Committee chairman and has taken a keen interest in promoting alternatives to gasoline, has said the stop-and-start nature of many energy tax incentives must change.

“We’ve got to narrow the gap between energy sources that have a huge array of subsidies and those that are sort of on a temporary roller coaster, and that’ll be the position I’ll take,” Wyden said.

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