2-year Spending Bill Includes Renewal of the Oil Spill Liability Tax (OSLT)
2-year Spending Bill Includes Renewal of the Oil Spill Liability Tax (OSLT)
Last week, Congress passed a 2-year, bipartisan budget deal to reopen the government which had partially shut down for a few hours. President Trump quickly signed the bill into law.
The budget bill includes a temporary funding measure, known as a Continuing Resolution (CR), which funds the government until March 23, possibly giving Congress enough time to reach an agreement on a long-term funding deal. The bill also lifts the federal debt limit until March 2019. Furthermore, it raises spending caps on domestic and military spending in fiscal years 2018 and 2019 by $300 billion and will provide $90 billion in disaster relief funding in response to last year’s hurricanes and wildfires.
Also included in the bill is a tax extenders package. One tax provision important to petroleum marketers is a prospective renewal of the Oil Spill Liability Tax (OSLT) effective on March 1, 2018 through Dec. 31, 2018. The 9 cents per barrel OSLT tax is imposed on crude oil at the refinery gate. Proceeds from the OSLT go into a trust fund used by the Coast Guard to pay for clean-up after accidents like oil spills. The Petroleum Marketers Association of America (PMAA), TFFA's advocate at the federal level, has been fighting against the tax being applied retroactively so this is welcome news to petroleum marketers. This is also good news because suppliers who continued to charge the tax even when it expired have indicated they will reimburse jobbers if the tax isn’t applied retroactively.
"To avoid confusion down the road, refiners should just be building this into the cost of product. We might be in this position (again) early next year because it expires Dec. 31, 2018 and there's no certainty that Congress will address tax extenders in 2018," said Rob Underwood, President of PMAA..
A second tax provision important to petroleum marketers includes a renewal of the $1 per gallon biodiesel blenders tax credit for tax year 2017 only. Other credits of importance that were extended retroactively for 2017 are the tax credit for the installation of qualified alternative fuel vehicle refueling property in a home or business; the Alternative Fuels Excise Tax Credit for the use of propane as a transportation fuel, known as the “propane autogas tax credit,”; and the Section 25C tax credit for the installation of qualified high-efficiency residential HVAC systems and certain energy-saving home retrofits.
Part of the budget deal requires the Department of Energy (DOE) to sell 100 million barrels of oil from the Strategic Petroleum Reserve. Specifically, 30 million barrels are to be sold between fiscal 2022 and 2025, 35 million barrels in 2026, and another 35 million in 2027. Furthermore, DOE is required to sale $350 million worth of crude oil in fiscal 2018 to pay for modernizing the reserve fund.
The budget bill includes a temporary funding measure, known as a Continuing Resolution (CR), which funds the government until March 23, possibly giving Congress enough time to reach an agreement on a long-term funding deal. The bill also lifts the federal debt limit until March 2019. Furthermore, it raises spending caps on domestic and military spending in fiscal years 2018 and 2019 by $300 billion and will provide $90 billion in disaster relief funding in response to last year’s hurricanes and wildfires.
Also included in the bill is a tax extenders package. One tax provision important to petroleum marketers is a prospective renewal of the Oil Spill Liability Tax (OSLT) effective on March 1, 2018 through Dec. 31, 2018. The 9 cents per barrel OSLT tax is imposed on crude oil at the refinery gate. Proceeds from the OSLT go into a trust fund used by the Coast Guard to pay for clean-up after accidents like oil spills. The Petroleum Marketers Association of America (PMAA), TFFA's advocate at the federal level, has been fighting against the tax being applied retroactively so this is welcome news to petroleum marketers. This is also good news because suppliers who continued to charge the tax even when it expired have indicated they will reimburse jobbers if the tax isn’t applied retroactively.
"To avoid confusion down the road, refiners should just be building this into the cost of product. We might be in this position (again) early next year because it expires Dec. 31, 2018 and there's no certainty that Congress will address tax extenders in 2018," said Rob Underwood, President of PMAA..
A second tax provision important to petroleum marketers includes a renewal of the $1 per gallon biodiesel blenders tax credit for tax year 2017 only. Other credits of importance that were extended retroactively for 2017 are the tax credit for the installation of qualified alternative fuel vehicle refueling property in a home or business; the Alternative Fuels Excise Tax Credit for the use of propane as a transportation fuel, known as the “propane autogas tax credit,”; and the Section 25C tax credit for the installation of qualified high-efficiency residential HVAC systems and certain energy-saving home retrofits.
Part of the budget deal requires the Department of Energy (DOE) to sell 100 million barrels of oil from the Strategic Petroleum Reserve. Specifically, 30 million barrels are to be sold between fiscal 2022 and 2025, 35 million barrels in 2026, and another 35 million in 2027. Furthermore, DOE is required to sale $350 million worth of crude oil in fiscal 2018 to pay for modernizing the reserve fund.
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