Federal Oil Spill Tax - PDF
Federal Oil Spill Tax document sample
Shared by: mdq72040
FEDERAL GASOLINE TAXES The oil spill liability tax is different from the LUST tax in that it is paid by refiners on crude oil. It was created in response to the Exxon Valdez spill. The oil spill liability tax went up on January 1, 2009 from $0.05 cents per barrel of crude to $0.08 cents per barrel. Refiners pay the tax and it is passed down as a cost. The tax only applies to petroleum products, so suppliers often break out a reduced oil spill liability rate on product transfer documents for ethanol blends. The tax does not apply to the ethanol portion of the blend. Therefore, the higher the ethanol blend, the lower the tax. The chart below calculates the "tax" according to ethanol content. It is important to remember that the oil spill liability tax is paid by the refiner on barrels of crude. It is not a "tax" after it leaves the refinery, but a cost folded into the price of the product. Unfortunately, breaking this out on the PTDs causes all sorts of confusion downstream. When tax exempt parties see it broken out as a "tax" on invoices they refuse to pay it. But they must pay it because it is a cost not a tax. On October 3, 2008, the Emergency Economic Stabilization Act of 2008 (EESA) was signed into law. Included among the many provisions in the law was an increase in the Oil Spill Liability Tax that is levied on each barrel of crude oil entered or produced in the United States. The EESA increases the Oil Spill Liability Tax from $0.05 cents per barell of crude to $0.08 cents per barrel beginning January 1, 2009. The following chart converts the Oil Spill Liability Tax from the new 8 cents per barrel rate to a per gallon rate on finished product: Product Cents Per Gallon Gasoline $0.0019 Diesel Fuel $0.0019 10% Ethanol Blends $0.00171 7.7% Ethanol Blends $0.0017537 5.7% Ethanol Blends $0.0017917 75% Ethanol Blends $0.000475 80% Ethanol Blends $0.00038 85% Ethanol Blends $0.000285 2% Biodiesel Blends $0.001862 5% Biodiesel Blends $0.001805 10% Biodiesel Blends $0.00171 15% Biodiesel Blends $0.001615 20% Biodiesel Blends $0.00152 Conversion Formula: $0.08 divided by 42 (number of gallons in a barrel) = $0.0019 cents per gallon. To obtain the cpg rate on biofuel blends multiply 0.0019 by the percentage of finished product in the blend (the tax does not apply to the biofuel portion) ex: 0.0019 multiplied by 0.90 (% of finished product in E-10) = $0.00171 cents per gallon.