Minnesota's Tax Disincentives.

[blueice]

Hello, ladies and gentlemen. I am new to this fine forum, so I hope this thread is in the right department.

Last year, I developed an interest in a CNG vehicles do to the high cost of gasoline.

I examined the tax issue regarding this fuel and discovered that in 2007 Minnesota had no tax on CNG. Of course, in their collect wisdom, our "benign" state legistraitors (the spelling is correct) decided to impose a fuel tax on CNG.

The effect tax rate is now .002217 per cubic feet, which represents a tax or fee of .2832 cents per GGE.

I understand that we should all pay our equal part for the use of roads, however, one would think especial consideration should be given to encourage our reduction of foreign oil.

There is only one station in the entire state, I live within 2 miles of it.
The last pricing (about 3 days ago) was $2.79 per GGE, which is a saving of only 60 to 70 pennies per gallon versus gasoline.

Base on an annual usage of 1000 gallons of gasoline, this would represent a saving of $700.oo per year, a fraction of the cost of a new CNG vehicle.

With the cost of CNG along with the state fuel tax, which BTW, is three cent higher than that of gasoline ()there is no discernibly incentive to purchase a CNG vehicle..

[CNGLO]

Re: Minnesota's Tax Disincentives.

This is just a guess, but I bet that there are fleets using natural gas that were not paying their fair share of the road tax. The fleets are likely using pumps that are not available to the public. If they are large vehicles, they have an added impact on the roads. I feel your pain, but can understand why your legistraitors [sic] would do such a thing. Utah recently changed its taxing system for compressed natural gas used for vehicles to, among other things, more fairly allocate the road maintenance costs to those who are putting heavier vehicles on the road.

[blueice]

Re: Minnesota's Tax Disincentives.

This is just a guess, but I bet that there are fleets using natural gas that were not paying their fair share of the road tax. The fleets are likely using pumps that are not available to the public. If they are large vehicles, they have an added impact on the roads. I feel your pain, but can understand why your legistraitors [sic] would do such a thing. Utah recently changed its taxing system for compressed natural gas used for vehicles to, among other things, more fairly allocate the road maintenance costs to those who are putting heavier vehicles on the road.

Thank you, GNGLO! I assume your views are correct, nevertheless, the number of vehicles using CNG are so few in numbers that the revenues gained is immaterial..

IMHO, it is of much greater importance to foster another source to fuel vehicles than to worry about collecting a few hundred of thousands of dollars. If the gas were produced by farmers, I would assure you that the fuel would be subsidized..

[CNGLO]

Re: Minnesota's Tax Disincentives.

I can certainly agree with you that the state should do more to foster CNG vehicles and that a disproportionate tax on natural gas is counterproductive.

[delgriffith]

Re: Minnesota's Tax Disincentives.

I'm also in Minnesota. The CNG infrastructure here is non-existent. I've never seen a CNG vehicle on the road in MN and doubt there are even any private fleets with their own filling stations using it here. I spend a lot of time at the airport and I know none of the airport transportation companies are on CNG. Why on earth they even bothered with taxing CNG for road use is beyond me. I suppose they were anticipating big increases in CNG vehicles with the hike in gas prices. This legislation seems similar to the EPA certification requirements - serving no purpose other than stifling fuel diversification and AFV development. I suspect they are just uninformed and possibly incompetent.

I've been to the one station here about 3 months ago and talked to a guy who handles the station - Jeff somebody or other. He said they are considering closing the station due to the fact that it isn't making money for them. Additionally the station was not 24 hours, closed on weekends, and looked likely to tell you "No gas today, maybe tomorrow." from time to time. So yeah, as a private vehicle owner in MN, there is no way. As a fleet operator it's very iffy.

[Midwest Biogas]

Re: Minnesota's Tax Disincentives.

One thing that you might not be aware of is that the Internal Revenue Service will give you tax credit of $.50 for every gasoline gallon equivalent that you consume.

Also for those of you that don't already have a CNG vehicle Uncle Sam will also give you back 50% of your investment in the conversion of your vehicle to burn CNG. I don't know if there is a cap on the amount or if this is good on a home fueling system or if it is just for the conversion kit for your vehicle but it is certainly worth looking into.

I am really glad to have found this group and to see that there are several people in here from MN.

Midwest Biogas is looking to take the anaerobic digester from the one at a time on a dairy farm and develop industrial scale BioEnergy Parks each producing in excess of one billion SCF of BioMethane per year.

Sincerely,

Nick Nelson
President
Midwest Biogas, LLC
558 Third Street
Gaylord, MN 55334
507-351-2714

[blueice]

Re: Minnesota's Tax Disincentives.

Mr Nelson, thank you for your response!

I did not know about the tax credit...

I wish you and your company great success...