Man fined thousands for using Vegetable Oil instead of Gasoline
06-14-07, 08:07 PM
#1
Man fined thousands for using Vegetable Oil instead of Gasoline
Driver ticketed for using biofuel
Vegetable oil sticks him with $1,000 fine
Bruce Henderson, The Charlotte Observer
Bob Teixeira decided it was time to take a stand against U.S. dependence on foreign oil.
So last fall the Charlotte musician and guitar instructor spent $1,200 to convert his 1981 diesel Mercedes to run on vegetable oil. He bought soybean oil in 5-gallon jugs at Costco, spending about 30 percent more than diesel would cost.
His reward, from a state that heavily promotes alternative fuels: a $1,000 fine last month for not paying motor fuel taxes. He has been told to expect another $1,000 fine from the federal government.
To legally use veggie oil, state officials told him, he would have to first post a $2,500 bond.
Teixeira is one of a growing number of fuel-it-yourselfers -- backyard brewers who recycle restaurant grease or make moonshine for their car tanks. They do it to save money, reduce pollution or thumb their noses at oil sheiks.
They're also caught in a web of little-known state laws that can stifle energy independence.
State Sen. Stan Bingham, R-Denton, is known around Raleigh for his diesel Volkswagen fueled by used soybean oil. The car sports a "Goodbye, OPEC" sign.
"If somebody was going to go to this much trouble to drive around in a car that uses soybean oil, they ought to be exempt" from state taxes, he said.
The state Department of Revenue, which fined Teixeira, has asked legislators to waive the $2,500 bond for small fuel users. The department also told Teixeira, after the Observer asked about his case this week, that it will compromise on his fine.
But officials say they'll keep pursuing taxes on all fuels used in highway vehicles. With its 29.9-cent a gallon gas tax, the state collects $1.2 billion each year to pay for road construction.
"With the high cost of fuel right now, the department does recognize that a lot of people are looking for relief," said Reggie Little, assistant director of the motor fuel taxes division. "We're not here to hurt the small guy, we're just trying to make sure that the playing field is level."
Alternative support
State policies firmly endorse alternative fuels.
In 2005 legislators directed state agencies to replace 20 percent of their annual petroleum use with alternatives by 2010. About 6,000 of the state's 8,500 vehicles are equipped to use ethanol. The state fleet also includes about 135 gas-electric hybrids.
Few states, however, are prepared to regulate the new fuels, says the National VegOil Board, which promotes vegetable oil fuel.
"State offices do not have the forms to appropriately and fairly deal with VegOil, nor the staff to enforce the nonexistent forms," said director Cynthia Shelton. "So either they tell people inquiring about compliance to get lost, or they make them jump a bunch of arbitrary hoops."
Outraged Illinois legislators this spring quickly waived that state's $2,500 bond requirement when an elderly man was nabbed for using waste vegetable oil.
In the mountain district of state Sen. John Snow, D-Cherokee, home-brewed ethanol was once known as moonshine. But a couple of constituents who made it for fuel have been fined for the same tax violation that got Teixeira in trouble.
Snow has introduced several bills to promote biodiesel, which under state law includes vegetable oil.
"One of the biggest problems in the state is a real lack of information for people who want to use alternative fuels," said Snow's research assistant, Jonathan Ducote. "It's just now appearing on [regulators'] radar."
Speedway sting
Teixeira's story began near Lowe's Motor Speedway on May 14. As recreational vehicles streamed in for race week, revenue investigators were checking fuel tanks of diesel RVs for illegal fuel.
The investigators spotted Teixeira's passing bumper sticker: "Powered by 100% vegetable oil."
"It was like some twist of fate that put me there," he said. "It was like I was asking for them to stop me."
Teixeira says revenue officials are just doing their jobs. But he thinks it's unfair that he was lumped with people who purposely try to avoid fuel taxes.
"Individuals who are trying to do the right thing environmentally cannot and should not continue to take this kind of financial hit," he wrote Gov. Mike Easley.
He'll pay the state fine and apply for a state fuel license.
"I'm ready to get myself legal," he said, "and start using vegetable oil again."
Vegetable oil sticks him with $1,000 fine
Bruce Henderson, The Charlotte Observer
Bob Teixeira decided it was time to take a stand against U.S. dependence on foreign oil.
So last fall the Charlotte musician and guitar instructor spent $1,200 to convert his 1981 diesel Mercedes to run on vegetable oil. He bought soybean oil in 5-gallon jugs at Costco, spending about 30 percent more than diesel would cost.
His reward, from a state that heavily promotes alternative fuels: a $1,000 fine last month for not paying motor fuel taxes. He has been told to expect another $1,000 fine from the federal government.
To legally use veggie oil, state officials told him, he would have to first post a $2,500 bond.
Teixeira is one of a growing number of fuel-it-yourselfers -- backyard brewers who recycle restaurant grease or make moonshine for their car tanks. They do it to save money, reduce pollution or thumb their noses at oil sheiks.
They're also caught in a web of little-known state laws that can stifle energy independence.
State Sen. Stan Bingham, R-Denton, is known around Raleigh for his diesel Volkswagen fueled by used soybean oil. The car sports a "Goodbye, OPEC" sign.
"If somebody was going to go to this much trouble to drive around in a car that uses soybean oil, they ought to be exempt" from state taxes, he said.
The state Department of Revenue, which fined Teixeira, has asked legislators to waive the $2,500 bond for small fuel users. The department also told Teixeira, after the Observer asked about his case this week, that it will compromise on his fine.
But officials say they'll keep pursuing taxes on all fuels used in highway vehicles. With its 29.9-cent a gallon gas tax, the state collects $1.2 billion each year to pay for road construction.
"With the high cost of fuel right now, the department does recognize that a lot of people are looking for relief," said Reggie Little, assistant director of the motor fuel taxes division. "We're not here to hurt the small guy, we're just trying to make sure that the playing field is level."
Alternative support
State policies firmly endorse alternative fuels.
In 2005 legislators directed state agencies to replace 20 percent of their annual petroleum use with alternatives by 2010. About 6,000 of the state's 8,500 vehicles are equipped to use ethanol. The state fleet also includes about 135 gas-electric hybrids.
Few states, however, are prepared to regulate the new fuels, says the National VegOil Board, which promotes vegetable oil fuel.
"State offices do not have the forms to appropriately and fairly deal with VegOil, nor the staff to enforce the nonexistent forms," said director Cynthia Shelton. "So either they tell people inquiring about compliance to get lost, or they make them jump a bunch of arbitrary hoops."
Outraged Illinois legislators this spring quickly waived that state's $2,500 bond requirement when an elderly man was nabbed for using waste vegetable oil.
In the mountain district of state Sen. John Snow, D-Cherokee, home-brewed ethanol was once known as moonshine. But a couple of constituents who made it for fuel have been fined for the same tax violation that got Teixeira in trouble.
Snow has introduced several bills to promote biodiesel, which under state law includes vegetable oil.
"One of the biggest problems in the state is a real lack of information for people who want to use alternative fuels," said Snow's research assistant, Jonathan Ducote. "It's just now appearing on [regulators'] radar."
Speedway sting
Teixeira's story began near Lowe's Motor Speedway on May 14. As recreational vehicles streamed in for race week, revenue investigators were checking fuel tanks of diesel RVs for illegal fuel.
The investigators spotted Teixeira's passing bumper sticker: "Powered by 100% vegetable oil."
"It was like some twist of fate that put me there," he said. "It was like I was asking for them to stop me."
Teixeira says revenue officials are just doing their jobs. But he thinks it's unfair that he was lumped with people who purposely try to avoid fuel taxes.
"Individuals who are trying to do the right thing environmentally cannot and should not continue to take this kind of financial hit," he wrote Gov. Mike Easley.
He'll pay the state fine and apply for a state fuel license.
"I'm ready to get myself legal," he said, "and start using vegetable oil again."
06-14-07, 08:19 PM
#2
Lexus Connoisseur
They're doing the earth a favor by using alternative fuels, but they get fined? So what's next. A tax on kW/Hr for electricity generated by your Hybrid motor? 
06-14-07, 11:17 PM
#4
"With the high cost of fuel right now, the department does recognize that a lot of people are looking for relief," said Reggie Little, assistant director of the motor fuel taxes division. "We're not here to hurt the small guy, we're just trying to make sure that the playing field is level."
No surprise that the gov't wants a piece of pie in everything
06-15-07, 03:51 AM
#6
Lexus Fanatic
The question of using vegtable oil as a bio diesel fuel has come up here on CL by diesel owners....more than once. In reply, I've cautioned that the legality of this, especially without a lot of red tape, was questionable.....here is your proof.
I don't particularly care for the way that motor fuel is taxed, myself, and I agree with the writer that some of these laws discourage innovation and work against our energy independence, but like it or not, we have to deal with the law as it is (or work to get the laws changed), not the way we would like it to be.
You end up paying taxes on other alternate vehicle fuels, too, such as propane, natural gas, and alcohol, because if the state doesn't tax them directly like they do motor fuels, they get the money in other ways, such as sales taxes when you buy them. The general sales tax would also apply on vegetable oil, too, even if it is not directly taxed as a motor fuel.
And, last, just think of what motor fuel taxes run in EUROPE (even on diesel fuel, which is not taxed as highly as gasoline, and you will probably not complain much here.
I don't particularly care for the way that motor fuel is taxed, myself, and I agree with the writer that some of these laws discourage innovation and work against our energy independence, but like it or not, we have to deal with the law as it is (or work to get the laws changed), not the way we would like it to be.
You end up paying taxes on other alternate vehicle fuels, too, such as propane, natural gas, and alcohol, because if the state doesn't tax them directly like they do motor fuels, they get the money in other ways, such as sales taxes when you buy them. The general sales tax would also apply on vegetable oil, too, even if it is not directly taxed as a motor fuel.
And, last, just think of what motor fuel taxes run in EUROPE (even on diesel fuel, which is not taxed as highly as gasoline, and you will probably not complain much here.
Trending Topics
06-15-07, 06:26 AM
#8
Out of Warranty
State and Federal motor fuel taxes were originally intended to be "user fees" for building and maintaining public roads and bridges. In that sense they are fair. If you operate a boat, generator, farm machinery, or other non road-going application and you save your receipts, you can apply for a partial refund of your road taxes every year. Most states will not give a full refund, claiming a "use" tax usually for inspecting and certifying storage tanks and pumps. Check with your state's taxing authority.
It's a fairly simple process, if you can prove its use didn't rack up any "road" miles, it could be worth your while. I suppose you could count the gas you use in your lawnmower and weedwhacker, but most states may require some minimum use - say 200 gallons annually - to qualify. There are always grey areas in this refund - for example you might have a difficult time claiming a refund for a dune buggy or dirt bike if it is street legal and licensed.
One old trick was for farmers to license their pickups as "farm vehicles" (some states have special plates), to duck the taxes on their fuel. While that might be fair for combines and tractors, most taxing agencies understand that while you might use that pickup to ride your fence line, it will probably spend most of its life on public roads. If you own storage tanks and dispensers on your place, typical of farm applications, there should be little dispute over its purpose . . . just don't get caught gassing your pickup from it.
In some localities marina operators have already deducted the road tax from the fuel at the pump (usually pocketing the difference). If you purchase fuel - either gas or diesel - at the dock, check with the marina operator to see if road taxes have been paid on it - and if you are eligible for a state refund.
Large air operators used to avoid fuel taxes by simply running their ground fleet on avgas that was not taxed. That is probably a false economy today, when you consider even 100LL is EXPENSIVE. Now there is a movement afoot for owners to consider installing automotive engine conversions in their light aircraft - in order to burn cheaper auto fuels - then apply for the refund. That's kinda going the long way around to save a buck, but if it works . . .
It's a fairly simple process, if you can prove its use didn't rack up any "road" miles, it could be worth your while. I suppose you could count the gas you use in your lawnmower and weedwhacker, but most states may require some minimum use - say 200 gallons annually - to qualify. There are always grey areas in this refund - for example you might have a difficult time claiming a refund for a dune buggy or dirt bike if it is street legal and licensed.
One old trick was for farmers to license their pickups as "farm vehicles" (some states have special plates), to duck the taxes on their fuel. While that might be fair for combines and tractors, most taxing agencies understand that while you might use that pickup to ride your fence line, it will probably spend most of its life on public roads. If you own storage tanks and dispensers on your place, typical of farm applications, there should be little dispute over its purpose . . . just don't get caught gassing your pickup from it.
In some localities marina operators have already deducted the road tax from the fuel at the pump (usually pocketing the difference). If you purchase fuel - either gas or diesel - at the dock, check with the marina operator to see if road taxes have been paid on it - and if you are eligible for a state refund.
Large air operators used to avoid fuel taxes by simply running their ground fleet on avgas that was not taxed. That is probably a false economy today, when you consider even 100LL is EXPENSIVE. Now there is a movement afoot for owners to consider installing automotive engine conversions in their light aircraft - in order to burn cheaper auto fuels - then apply for the refund. That's kinda going the long way around to save a buck, but if it works . . .
06-15-07, 06:26 AM
#9
Actually, this is coming up a lot over here. People are running their diesel cars on cooking oil from the supermarket - some are even going round the fast food restaurants and collecting used oil, filtering it and then using it. It's all perfectly legal and the cars/SUVs run fine, BUT you still have to pay fuel duty tax on it to the Government. You still save money but not so much to make it attractive to me - although I do like the idea of driving around leaving a faint whiff of french fries behind.
Farmers get a break by running their vehicles on "red diesel" a fuel with a red dye in it - it has significantly lower taxes on it. However, it's illegal for road use and the penalties are severe if Customs and Excise dip your fuel tank and they find you're using it.
Farmers get a break by running their vehicles on "red diesel" a fuel with a red dye in it - it has significantly lower taxes on it. However, it's illegal for road use and the penalties are severe if Customs and Excise dip your fuel tank and they find you're using it.
Last edited by Big Andy; 06-15-07 at 06:30 AM.
06-15-07, 06:40 AM
#10
Lexus Test Driver
06-15-07, 08:27 AM
#12
06-15-07, 08:32 AM
#13
Out of Warranty
Now politicians on the other hand . . .
Two months ago there was a proposal in the Texas Legislature to suspend state taxes on motor fuel. Texas is currently awash in tax revenue - to the tune of 7 or 8 billion dollars - and is suffering an embarrassment of riches, always a prime target for "reform" candidates. Rather than actually DO something with the money, or investing it at interest for future use, the money was beginning to cause a panic in the state house. What if somebody knew we had all this cash? How can we keep going back to the voters for more taxes when we have THIS just sitting in the bank?
In a cynical bid for votes, our legislators actually considered a bill to suspend gas taxes for 90 days to "help our citizens in this time of high-cost gasoline". HAH! They tabled the bill with only days to go in the legislative session and the session timed out, stranding the bill. Now the Texas legislature only meets every two years, so in next year's election, look for our politicians to weep publicly over their foiled attempt to effectively cut gas prices over 20 cents per gallon "for the little guy". Naturally, it doesn't matter which party's ticket the legislator is running on, it's going to be the other party's fault.
Slick?
06-15-07, 10:38 AM
#15
Out of Warranty
Fuel tax harvests revenue proportional to actual use of the roadway because it relates directly to the number of miles driven. It has the additional benefit of offering the drivers of more economical vehicles a considerable "tax break". What could be more fair than that?
Last edited by Lil4X; 06-15-07 at 11:08 AM.