Who Really Supports the NAT GAS Act (part 2)

Jun 26, 2011

The NAT GAS Act (H.R.1380) has caused quite a stir around Washington. As CQ (sub. req'd) writes, "Federal energy subsidies are under fire from conservative groups, and organizations including Heritage Action for America and the American Conservative Union are pressing Republicans to oppose the natural gas vehicle legislation as a costly and unnecessary government intrusion into energy markets."

Last week, supporters released a letter claiming "American Businesses Endorse NAT GAS Act." The letter, signed by 220 American businesses, acknowledges that they are already in the process of converting - they say the NAT GAS Act "enables businesses like make the switch that much faster."

Most Americans would not be surprised to find out that most of the signatories would be eligible to receive a targeted tax subsidy if the NAT GAS Act were enacted into law.

This handy chart breaks it down. (after the jump)


As a reminder, the NAT GAS Act would give auto manufacturers a $4,000 tax credit for every natural gas vehicle produced, and consumers would receive $7,500 for the purchase of a light-duty car and $64,000 for a heavy-duty truck. Businesses could get $100,000 for installation of a commercial fueling station, and fuel would be subsidized at the rate of 50 cents per gallon.

It should come as no surprise to anyone that businesses would favor receiving targeted tax credits for doing something they already intend to do.

As Heritage Action's COO Tim Chapman points out in an op-ed in the Philadelphia Inquirer, companies are already embracing natural gas vehicles:

Ford Motor Co. is on to something. This year, hundreds of taxis, powered by compressed natural gas, will pop up around the country: 120 Ford Transit Connects in the Los Angeles area, 70 in Connecticut. Las Vegas, St. Louis, and Philadelphia will also see their own fleet of Transit Connects soon.

America's abundant supply of cheap, accessible natural gas and the stubbornly high cost of gasoline and diesel are making natural gas vehicles more attractive and economical. This is how the free-market economy is supposed to work. With more than 111,000 natural gas vehicles on U.S. roads and more than 12 million worldwide, it is clear a market is evolving.

Not surprisingly, 11 taxi-related businesses signed onto the Sullivan letter:

Alexandria Yellow Cab, California Yellow Cab, Checker Transportation Group, Kansas City, MO/KS, City Cab Los Angeles, Liberty Yellow Cab, Metro Taxi New Haven Connecticut, Taxi Club Management, Taxi Medallion Management, Yellow Cab Company, Yellow Cab Coop, and Yellow Checker Cab Company, Inc.

The real story behind the letter is not that "American businesses endorse" the NAT GAS Act, but rather that these businesses are trying to use the tax code to distort the market in their favor.

Read Part 1: Lawmakers want to Subsidize Natural Gas Vehicles and Regulating Natural Gas Production