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5.12.04 U.S. Senate energy tax provisions will benefit 66 million natural gas consumers Washington, D.C. -- The 66 million homes, schools, businesses, manufacturers and other customers that rely on natural gas will benefit from the energy tax provisions that were included in legislation passed late yesterday by the U.S. Senate, according to the American Gas Association (AGA). An energy tax package was included in the JOBS Act (S. 1637), approved by a 92-5 vote. "Natural gas is increasingly popular because it is a clean, efficient and domestic form of energy. But as demand for natural gas has grown in recent years, supply has not kept pace, resulting in price volatility," said AGA President and CEO David Parker. "Thus, we are pleased that the Senate has acted to help ensure that prices are affordable by increasing natural gas supplies, promoting expansion of pipeline systems, encouraging energy efficiency and boosting use of innovative natural gas technologies." In addition to being the nation's most popular home-heating fuel, natural gas is the backbone of jobs and the U.S. economy. In fact, more than one-third of all natural gas consumed in the U.S. supports manufacturing, Parker noted. Provisions of particular interest to natural gas utilities and their customers would: Increase natural gas supplies: Greater supplies of natural gas mean lower prices for consumers, and a variety of tax provisions are designed to stimulate additional natural gas production from non-traditional sources (such as coalbed methane) while encouraging producers to continue finding natural gas when market prices drop. Promote construction of an Alaska natural gas pipeline: Alaska holds enormous amounts of natural gas approximately 250 trillion cubic feet (Tcf), or enough to support all of the United States' current natural gas needs by itself for more than a decade. Unfortunately, most Americans do not currently benefit from these supplies because there is no pipeline to transport Alaska natural gas to the lower 48 states. The Senate bill treats certain Alaska pipeline property as seven-year property, and provides a credit for production of Alaska natural gas (which would be available only if wellhead natural gas prices fall below $1.35 per million Btu far lower than today's market price of approximately $5.00). Alaska natural gas pipelines that have already been proposed would meet approximately 10 percent of the United States' daily natural gas needs (by adding 4 6 billion cubic feet (Bcf) daily). Expand natural gas infrastructure: Accelerate the current tax depreciation schedule for natural gas utility expenses from 20 to 15 years (making the depreciation schedule for local natural gas utilities comparable to interstate natural gas pipelines). This will make it easier for natural gas utilities to attract the estimated $70 billion in capital they will need during the next two decades to expand their pipeline systems and build new underground storage facilities to meet growing demand for natural gas from new homes, hospitals, schools, office parks, factories and other customers. Promote innovative end-use technologies: Encourage greater energy efficiency in commercial facilities by promoting several technologies typically fueled with natural gas, including:
Improve air quality through natural gas vehicles: Provide a 40 percent base credit for the incremental cost of purchasing a dedicated natural gas vehicle (as compared with a comparable petroleum model), and credits for the purchase of natural gas vehicles, provide a retail credit for energy utilities and others that sell natural gas for vehicular use. Now that the U.S. Senate has passed the energy tax package, the U.S. House of Representatives will need to vote on a similar package -- then negotiate a final version that can be signed into law. Even after Congress agrees on a final version of the energy legislation, Parker cautioned, natural gas price relief will not be immediate, due to the long lead times associated with energy production and delivery. Future legislation will be needed to address additional supply issues as the natural gas market grows, he said. The American Gas Association represents 192 local energy utility companies that deliver natural gas to more than 53 million homes, businesses and industries throughout the United States. Natural gas meets one-fourth of the United States' energy needs. For more information, go to the American Gas Association website. |
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