July 9, 2008

Propane's Proponents

Might be the fuel of the future - cheaper than gasoline, and producing lower carbon emissions - be the same thing you use to barbecue burgers? Propane has its proponents. Largely a byproduct of natural gas and crude oil processing, propane is already used as a fuel in 10 million vehicles worldwide, including 200,000 in the U.S. While it likely won't ever replace gasoline, it could be one of the many alternatives that helps bridge the gap between today's internal combustion engines and the era of electric and hydrogen fuel cell vehicles

Reading the story, I couldn't help but think back to how the Bredesen administration slapped a new sales tax on barbecue grill propane last year. Before that, propane had not been subject to a sales tax primarily because some people - mostly in rural areas - use it to heat their homes. The Bredesen administration - sitting on a billion dollars in surplus tax revenue - couldn't stand the thought that suburban barbecue grill owners might be saving a few dollars each summer so they amended the tax exemption to cover only propane "delivered to the home."

I'm betting the tax exemption goes away if propane-fueled vehicles become common in Tennessee - else you'll see lots of folks installing large propane tanks on their property not to heat their homes but to fuel their cars.