• 4 minutes Will Libya Ever Recover?
  • 9 minutes USGS Announces Largest Continuous Oil Assessment in Texas and New Mexico
  • 13 minutes What Can Bring Oil Down to $20?
  • 16 minutes Venezuela continues to sink in misery
  • 22 hours Alberta govt to construct another WCS processing refinery
  • 6 mins Paris Is Burning Over Climate Change Taxes -- Is America Next?
  • 9 hours Rage Without Proof: Maduro Accuses U.S. Official Of Plotting Venezuela Invasion
  • 13 hours Instead Of A Withdrawal, An Initiative: Iran Hopes To Agree With Russia And Turkey on Syrian Constitution Forum
  • 24 hours Let's Just Block the Sun, Shall We?
  • 15 hours Water. The new oil?
  • 2 days U.S. Senate Advances Resolution To End Military Support For Saudis In Yemen
  • 10 hours Storage will in time change the landscape for electricity
  • 2 days Quebecans Snub Noses at Alberta's Oil but Buy More Gasoline
  • 13 hours Regular Gas dropped to $2.21 per gallon today
  • 2 days OPEC Cuts Deep to Save Cartel
  • 3 days Global Economy-Bad Days Are coming
Oil Markets Stuck As Hedge Funds Remain Bearish

Oil Markets Stuck As Hedge Funds Remain Bearish

Crude prices haven’t staged much…

Oil Prices Crash To 1-Year Lows

Oil Prices Crash To 1-Year Lows

Oil prices have crashed to…

U.S. Oil Refiners Look To IRS For Major Tax Credit

Refinery

Refiners in the U.S. are contemplating a claim that the addition of butane to gasoline qualifies for a US$0.50 per-gallon tax credit. The liquefied petroleum gas was defined as an alternative fuel under a now-expired 2008 law aimed at promoting cleaner fuels and, according to two attorneys as quoted by Bloomberg, refiners are still entitled to their tax credit under that law.

Butane is used as additive to gasoline during the winter months to comply with government regulation about pollution-causing emissions. The Internal Revenue System considers butane a liquid petroleum gas, along with ethane and propane, but according to the authority, it does not fall in the alternative-fuel category that is eligible for tax credits.

The IRS is currently reviewing this question—one on a long list of questions related to taxes that the IRS plans to settle over the next 12 months. Meanwhile, refiners could really benefit from the tax credit as they mix some 142 million barrels of butane in gasoline every year. That’s 6 billion gallons or tax credits to the tune of US$3 billion.

The chances of successfully claiming butane as tax credit-bearing additive seem to be slim. Bloomberg relates the case of Sunoco, which last year tried to claim US$300 million in tax credits for the addition of ethanol to the gasoline it sells. The Court of Federal Claims, however, sided with the government in its ruling, saying that Sunoco’s claim would “result in a windfall that Congress did not intend.”

On the other hand, according to Energy Information Administration analyst mason Hamilton, “There’s no way refiners and blenders would leave money like that on the table.” Margins have tightened, and costs have risen in the last couple of years, with refiners’ profits down 60 percent in 2016 alone. Meanwhile, butane prices have gone up by as much as 49 percent since June, Bloomberg notes, making the tax credit claim worth considering.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News