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Oil Spill Liability Tax Basics 2020 Update

Posted by OPIS Staff Report on Apr 20, 2020 8:00:00 AM

The federal oil spill liability tax came back after a one-year hiatus. Here's everything you need to know about what it means for gasoline and diesel prices.

The Oil Spill Tax: What Do I Need To Know?

  1. The fee, which expired on Dec. 31, 2018 has been reauthorized.  

  2. Refiners are responsible for the fee, which is 9cts per barrel of crude.

  3.  It may appear as a line item on some invoices, but other companies will simply build it into the rack price. Click to see how suppliers will handle the tax.

  4. The oil spill tax  is not coming back on a retroactive basis. It will simply reappear as a charge that started Jan. 1, 2020.

  5. It's set to expire again on December 31, 2020.

How Does the Oil Spill Tax Translate to Diesel and Gasoline?

Since the fee only applies to crude and crude-sourced hydrocarbons, it amounts to different charges for various types of gasoline and diesel.  Here's a breakdown:

  • Diesel fuel:  0.2143cts/gal

  • A 5% biodiesel blend:  0.2036cts/gal

  • B20:  0.1714cts/gal

  • A typical 10% ethanol blend of finished motor fuel: 0.1929cts/gal

  • E0 (all hydrocarbon) gasoline: 0.1929cts/gal.

Oil Spill Tax History: Looking Backward

The 9 cents per barrel federal oil spill liability tax has had a bumpy ride lately.

It expired Dec. 31, 2017 and then went back into effect March 1, 2018, after Congress reinstated the tax as part of a congressional budget bill. It expired again on Dec. 31, 2018 and was recently reauthorized.

It's set to expire again on December 31, 2020.

Since its inception in 1986, the tax has been collected on domestic crude oil and imported crude oil and petroleum products as a main source of revenue to fund the Oil Spill Liability Trust Fund to aid in the cleanup of oil spills.

U.S. oil companies exposed to the tax have generally passed along the cost to their wholesale distributors as part of their wholesale rack price or as a separate line item expressed in cents per gallon.

OPIS maintains an updated list of how individual companies handle the oil spill tax as part of their wholesale billing invoices. Check out the list of suppliers.

Oil Spill Liability Tax Has Been a Thorny Issue for Industry in Past 

The oil spill liability tax has long been a sore spot for the industry, especially when it comes to including the fee as part of the wholesale price or listing it as a separate line item.

The Petroleum Marketers Association (PMAA) in the past has advocated that the tax be embedded in the wholesale rack price and not listed as a separate line item since it is largely a tax on crude oil paid by refiners and producers and not by distributors and jobbers.

Nonetheless, most suppliers have broken out the tax as a separate line item on invoices.

As we mentioned, OPIS keeps a list of how individual companies handle the oil spill tax as part of their wholesale billing invoices. Click below to check out the list  and be sure to bookmark the page. The supplier listings will be updated as we learn of changes.

See Oil Spill Supplier List

Tags: Gas & Diesel, Crude

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