FREE MARKETS BEST FOR LPG, OTHER FUELS

Maybe it's because the fuel isn't "new" enough and therefore not sufficiently "alternative." Or could it be that too many people know too little about it? For some reason, U.S. policy making seems to have a blind spot regarding liquid petroleum gas (LPG). Formation of a group called Propane Gas Marketers Coalition (PGMC) is, therefore, a welcome development. The Washington, D.C., group of propane gas executives aims to promote the benefits of their product, especially as an

July 19, 1993

3 min read

Formation of a group called Propane Gas Marketers Coalition (PGMC) is, therefore, a welcome development. The Washington, D.C., group of propane gas executives aims to promote the benefits of their product, especially as an alternative motor fuel.

SEEKING FAVORS

PGMC isn't above seeking favors from taxpayers. Alternative fuels, it says, should receive preferential tax treatment relative to petroleum. Government, in other words, should use tax laws to force consumers into possibly uneconomic fuel choices.

That position, and any like it for any other fuel-including petroleum-receives no applause here. Government should set reasonable environmental standards and let fuels compete on the basis of consumer choice.

But no fuel should be placed at a disadvantage because policy makers do not understand it. Here, PGMC makes some very good points and can serve a useful function.

The need seems manifest in a comment by President Bill Clinton during a speech last April, as quoted by PGMC: "I am signing an executive order which commits the federal government to buy thousands more American made vehicles using clean, domestic fuels such as natural gas, ethanol, methanol, and electric power." Clinton might have thought he was covering LPG, which already fuels 350,000 vehicles in the U.S. and 4 million worldwide, when he mentioned natural gas. Officials too often need reminding that at the point of consumption LPG isn't the same thing as natural gas-or as gasoline.

At present, federal motor fuel taxes apply to LPG at the same rate that they do to gasoline on a volumetric basis. PGMC points out that on a BTU basis, the LPG federal tax rate is higher than the gasoline rate because of LPG's lower energy content per given volume of fuel. Both fuels are taxed more heavily than fuel methanol and ethanol, which enjoy tax breaks, and compressed natural gas, which is exempt. Disparities would not disappear under the Senate's proposed motor fuel tax increase.

LPG marketers have a legitimate complaint about how current and proposed taxes do and would affect their fuel. If the government must promote "clean" alternatives to gasoline, it certainly should not place a fuel with definite environmental advantages at a competitive disadvantage to others. Subsidies and exemptions already in effect make considerations about fairness somewhat beside the point. Still, unfairness should not have its roots in failure by policy makers to distinguish a fuel with not only unique and valuable properties but also an unsubsidized standing in the energy market.

FUEL PROMOTIONS

The larger problem is state promotion of alternative fuels in the first place. Recent environmental and energy laws have pushed government past its legitimate task of establishing environmental quality guidelines and into the business of selecting fuels. Clinton administration energy tax proposals would aggravate the problem. In this environment, fuel choice becomes a contest of glitzy press kits, not to mention political donations. Some worthy fuels are bound to be overlooked. And consumer interests are bound to suffer.

Fuels should compete in markets under reasonable environmental standards, uniformly applied, not in the halls of government. LPG shouldn't have to struggle for official notice. In a fair fight conducted in the proper arena, it will win its share.