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Bills In US Congress Propose Lowering of Federal Diesel Fuel Tax

In the context of rapidly increasing diesel fuel prices, two bills currently in the US Congress propose reducing the $0.24/gallon federal tax on diesel fuel by $0.061 per gallon, thereby dropping it down to $0.183 per gallon, just slightly below the federal gasoline tax rate of $0.184 per gallon.

Although the federal tax on diesel is constant, state taxes vary widely. Click to enlarge.

Senator Olympia Snowe (R-ME) introduced The Diesel Tax Parity Act of 2008 (S. 2896), which  calls for the reduction in the federal tax on diesel fuel to 18.3 cents per gallon until 31 December 2008. Congresswoman Mary Bono Mack (R-CA) introduced the Diesel Tax Fairness Act (H.R. 6106), proposing the same reduction to $0.183, with an expiration of 31 December 2010.

The nationwide average tax (including federal and state excise taxes and other taxes) on motor diesel fuel as of January 2008 was $0.536, an increase of 0.7 cents from July 2007, according to the American Petroleum Institute (API). The nationwide average tax on gasoline was $0.470 cents per gallon as of January 2008, up 0.1 cents from July 2007.

Other taxes include applicable sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees. Adding these taxes and fees to the state excise taxes results in a volume-weighted average state tax of 29.2 cents per gallon, according to the API.




As the owner of a low mpg diesel, I still say fie on this idea. Heavy diesels do more road damage, and should pay more (although I suppose one could argue that on a per mile basis if the tax was the same they'd be paying more due to the lower MPG...). But whatever. Balance the budget already; quit cutting taxes.


What (wrong doing) will politicians do to get elected. These are not the times to encourage fuel consumption. Can't they think past election day?


I don't understand why the taxes are different in the first place, but I generally disagree with lowering taxes, particularly when the budget is not balanced and this $.06 change in the tax will hardly be noticed.

I would love to know if anybody has an explanation for why diesel is so much more than gas these days. I have read a lot of explanations, none of them very convincing. I have noticed over the last 10 years that gas and diesel didn't necessarily fluctuate together, sometimes diesel was up while gas was down, sometimes vice versa. I also notice a larger variation in the cost of diesel. While gas in Philly is around $4-4.20, diesel is anywhere from $4.80-5.40 for pumping stations not all that far apart.

In France, diesel has always been taxed less and, consequently, cost less than gas. Although this led to more traditional, non-global warming pollution, it led to less CO2 emissions before anybody even thought about CO2 emissions. Now that diesels are cleaner in terms of traditional pollution, they are a much better deal. Furthermore, many passenger cars in Europe are diesel and not "heavy", thus they do not damage the road any more than a gas car.


U.S. politicians that propose tax cuts in the midst of a multi-trillion dollar war on terrorism, Iraq, and Afghanistan, roads and bridges that are falling apart, a trashed U.S. dollar, and hundreds of billions of dollars in budget deficits as far a the eye can see -- should be committed to an asylum for the insane. Particularly, when the fuel they want to reduce taxes on does so much damage to human health and the environment when burned in legacy vehicles. We should be taxing things that are bad, (e.g., energy consumption, pollution, coal and oil consumption, drugs, alcohol, smoking, and huge multi-million dollar inheritances, while reducing taxes on things that are good for the country, i.e., labor, profits, savings, and capital gains.

arnold .

Garenteed to increse consumtion , accelerate depletion, reduce R&D and cripple the buget.
At a time when food inflation and from bio and diminishing reserves, Heavy industrial pollution and AGW are already shaking the world.
And the Multinationals are gouging and doubling the prices ever few years.
What am I missing?

arnold .

Increase the fuel tax and any other pollution till it is not an issue and bring the coal industries and others rapidly up to the same rate per ton CO2.
And Tax weapons of mass destruction at 100% To demonstrate the patriotic principles the profiteers espouse.

"why diesel is so much more than gas these days?"

Phony virtual financial manipulation. That's why.


Hum ho.



The Federal government will always have their own agenda. Sometimes it will work for you and sometimes it won't. One thing is for sure, it will never be what anybody ever expects.


Diesel costs more today because:

  1. It's got an export market to Europe, and
  2. Cost of USLD processing.
No need to look for conspiracies.

Andrey Levin

To add to E-P:

Europe has gasoline refining overcapacity and sends truckloads of gasoline to N.America, keeping price for gasoline (and profit margin of US gasoline producers) lower.

Mike W

Those ridiculing the reduction of diesel taxes should broaden their vision. This will help different technologies compete on a more equal footing. We are about to see the release of several new clean diesel passenger vehicles (clean, quiet, and good performance). Since these vehicles get about 30% greater fuel efficiency than comparable gasoline engines, shouldn't we be in favor of removing obstacles that discourage consumers from making the most fuel efficient choice. To me, this falls under the heading of getting government out of the way.

I generally am not as troubled about gas taxes as other forms of taxes, so long as it is only used for roadways and roadway maintenance and is not wasted. It is a direct consumption tax that is paid primarily by the beneficiaries. However, for those who generally think that keeping taxes high will balance the budget, boy are you naive. The more money government takes in the more it will spend. The first and best control on government spending is the reduction of taxes. However, again for my naive friends, reducing taxes almost always results in increased tax revenues, due to the incredibly positive affect it has on the economy. The point to stop reducing taxes is when tax revenues stop increasing. Therefore, if you want a balanced budget, you have to insist on it. Giving in to the bogus need for tax increases will not do it.


Reducing taxes on diesel will do NOTHING to change the setup of refineries which are currently optimized to make gasoline.  Since the tax cut won't increase the supply, it will just give more money to refiners and less to the road-repair fund.

I'd love to cut my fuel costs (I drive a diesel car), but I'm a realist first and foremost.

Bruce Miles

Looking ahead , we should tax deisel at less than gasoline. If we cannot afford the tax decrease then raise the gas tax above the deisel.
The low sulphur deisel that we now have combined in a vehicle that gets 45-50 mpg is a win for the country. The hybrid and ethanol thing will not have as big an impact as getting people to switch to deisel.

Europe has taxed deisel lower than gas for years and that is why the VW tdi is the best selling car in Europe

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