Workshop Daily Summary – Thur Feb 27, 2014

REPORTING CNG / LNG

To say the reporting of these two fuels for IFTA is a nightmare would be an understatement.  Another learning  curve thrown at the IFTA community.

CNG (Compressed Natural Gas), a fuel typically used as a home heating fuel or something to power large generators, is now being used in commercial motor vehicles as is LNG (Liquified Natural Gas).

These fuels, although used in conjunction with conventional diesel fuel (dual fuel), the alternative fuel is not taxed at the same rate.  Heck, CNG as a gas isn’t even measured in the same way.  Then you have to deal with evaporation, liquid vs gas.  Now complicate it by having to make this work between both the US and metric measurement systems.

The discussion is just starting.  The news isn’t good and there is absolutely NO standardization.  Here are what some of the states are doing.  Right now, if there is no rate, there is no tax.

There’s a chart with a list of states, some rates and comments on the IFTA website.  The information to get to it is at the bottom of this post.

The use is growing.  Listen to this.  Housing developers are starting to tie into the natural gas pipelines and hooking up houses with a natural gas distribution apparatus in their garages to fill their cars — or commercial trucks as the case may be.  People, the world is changing.

In California, due to the greening of that state, huge incentives are being offered to fleet operators to adopt CNG.

It’s a big boat to turn and it doesn’t come easily.  Eduction is the key.  The producers, such as T. Boone Picken’s Clean Energy, are trying to work with legislators to help make this work.

Considerations for using it?  Greeness, fuel supply & availability.  The biggest one is cost.  CNG costs about $1.50 less per gallon than diesel.  LNG about $1.00 less per gallon.  Because of the growing demand on diesel all over the world, the price is increasing and the differential between diesel and alternative fuels will grow over time.

According to Bob Pitcher of the ATA, fuel makes up about 40% of a fleet’s operating costs.  Fuel surcharges on contracts still can make using diesel a cheaper alternative.  Regardless, there is a lot of experimentation with these alternative fuels to see how these long-haul companies can use these fuels and save money.

The price of diesel will increase, but because of the abundance of Natural Gas will increasingly make it a more attractive alternative.

Natural gas is currently being used in some limited markets — transit, waste hauling, California.  UPS bought 1,000 vehicles this year to use in some of their regional operations.  Of course, they have their own centralized fueling locations with the trucks returning home every night, it’s a great test scenario.

About 20 states are currently providing incentives for the adoption of natural gas.

Ever heard of Dimethyl Ether?  Neither had I.  It’s yet another alternative fuel being discussed for the future.

WANT TO KNOW WHAT IS HAPPENING WITH IFTA AND IRP?

Did you know that each of the jurisdictions are subject to a peer review for both IFTA and IRP?  Yup.  Every four years, each jurisdiction goes through an audit conducted by the respective peer review committees of each group.

Currently New Jersey is under review for not meeting their IFTA audit quota.  They were taken through the IFTA Dispute Resolution Process and are now making the changes necessary to come into compliance.

Want to get involved to make a difference?  Both government and industry members can be involved.  It’s a great way to stay current with the rules and the changes to the programs.  Visit the IFTA and IRP websites to see what committees are available, where your interest lies and how to join:

International Registration Plan (IRP)  www.irponline.org
International Fuel Tax Agreement (IFTA)  www.iftach.org

IFTA INDUSTRY ADVISORY COMMITTEE MEETING

About 30 people met after the final Town Hall of the conference.  The IFTA IAC meets two times per year. Once at this workshop and the second meeting is held in conjunction with the IFTA Annual Business meeting in the summer.  The IAC is a formal mechanism through which representatives of the motor carrier industry can present to the IFTA membership and IFTA, Inc., industry concerns, interests and recommendations regarding IFTA and IFTA, Inc., programs, functions, policies and procedures.

That’s it for now from the Audit workshop.  The next meeting is the IRP Annual Meeting in Albuqurque in May.  Check out their website for the details.  www.iftaonline.org.  That should prove to be a lively meeting because they will be discussing how the FRP (Full Reciprocity Plan) will be rolling out.

Keep checking this blog for more information on the RFP and other fun stuff related to tax compliance for fuel and licensing.

IMG 0204

One of the meeting rooms at the workshop, and auditors.

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