• Aug 17th 2006 at 4:04PM
  • 21
It sounds like some kind of kinky fantasy government plan, but there really is a Lust Tax in this country. The Lust money is actually part of the Leaking Underground Storage Tank (LUST) Trust Fund, and each time many of us gas up, we pay into the fund. The Fund was set up in 1986 and is financed by a 0.1 cent tax on each gallon of motor fuel sold nationwide, according to the EPA. Except it's not, as a member of the San Francisco Biofuels group recently discovered when driving through Arizona. During one fill-up (at Western States Petroleum in Phoenix), the driver bought biodiesel and saved about $20 on a $42 bill because of two discounts for the "Federal L.U.S.T. tax" and a "Agri-Biodsl Price Inscentiv". The driver claims each discount saved $10.40, which is far more than the EPA's 0.1 cent a gallon. However this driver received the discount, it prompted me to look into this LUST tax a little bit and see how it relates to biofuels.
The LUST Fund is supposed to pay to clean up leaking underground gasoline storage tanks when a responsible party cannot be found, and it is used to enforce the laws when one can be found. But it seems more money is going in to the Fund than is being taken out to pay for clean up and a lot of people aren't happy with the LUST tax. The Society of Independent Gasoline Marketers of America, for example, is adamantly opposed to the way the LUST Trust Fund has been applied in recent years. They claim the fund has got about $2.3 billion in the bank, and $200 million are added each year. On top of this, only about $75 million is taken out annually for cleaning up messes across the country. Sites around the country need to be cleaned up because the petroleum in the tanks is leaking into the groundwater. Since biofuels contain less petroleum (or none) than standard fuels, anecdotal evidence from the drive through Arizona implies that biofuels are not subject to the LUST tax. I have not been able to confirm or deny this, but will do a little more research for a future post. Anyone out there have any knowledge on this topic?

[Source: SF Biofuels, EPA, NPN]


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  • 21 Comments
      • 9 Years Ago
      As much as I abhor all the little unnoticed taxes we pay on a daily basis, the LUST tax is something you may want to pay attention to, and keep around just in case. At least when it comes to the application of funds and if it is needed. You may be surprised but now that the Government, in their infinite wisdom, has had their way with Ethanol production and distribution this fund may now be more critically important than anyone might think. Ethanol is after all, a solvent, and a very powerful one at that. If you are old enough to recall during the late 70's and 80's the big movement to replace all of the underground gasoline tanks around the country. This was done because of real and potential leaking into the local groundwater supply. Not good. So by Government edict all of the steel underground tanks across the country were replaced. Of course, all of those mom and pop gas station owners that you used to know could in no way shape or form afford tens of thousands of dollars to replace their underground tanks, and many went out of business. The Government ( your tax dollars ) had to step in and pick up some or much of the cost. Hence the creation of the LUST fund, I suppose, so the now corporate owners of the gas stations wouldn't have to foot the bill. But wait, the replacements were all FIBERGLASS. Remember I mentioned that ethanol is a solvent. Get ready; ethanol reacts with the resins that hold the tanks together. Boating manufacturers are up in arms over this because of the danger of fire and death from leaks in fiberglass boat fuel tanks. We are "splash" blending ethanol, which prevents proper mixing. This in turn may cause "hot" spots in underground tanks where high concentrations of ethanol pools in one place possibly dissolving a hole the tank. Congress and the Environmental movement conveniently ignored this. So, we use ethanol to cut down on gasoline consumption. What do we get. Gas mileage the goes down as much as 35% per vehicle so we have to buy more fuel, a net loss. Higher cost of distribution, replacement of underground tanks nationwide, again, ethanol that uses more energy to make than we get out of it, and massive amounts of water resources depleted because it takes hundreds of gallons of water to make one gallon of ethanol. Water being the one thing we all need to survive and grow food. Biodiesel works. Ethanol for now, is just stupid.
      Paul3
      • 9 Years Ago
      The LUST fund is eventually going away. The federal government realized that the best way to stop the UST leaks from occurring is to monitor (inspect) all tank owner's sites to verify that they are following the rules and performing the required test for leaks. These new rules, part of the Energy Bill signed in August of 2005 makes is mandatory for states to set up inspections verifying Full Compliance of the (Federal and State) Law at all UST sites within a certain timeframe - it is two years the first time and once every three years from then on or vice versa. According to our state regulatory agency, there are sites that they have never inspected and do no have the manpower to do so especially in a two or three year timeframe. This will be interesting to see how this comes out. I personally think it is a great idea because there are many UST owners not complying with the law and just sending in a "self certification" stating that they are. Here is another perfect example of a agency not doing the job it is responsible to do because they state they do not have enough people but you and I both know that programs can be set up to outsource this work and get the job done especially with the federal government having funds to do just that. It is my understanding that the LUST funds will be used to assist states in setting up these inspections.
      JimB
      • 9 Years Ago
      Never heard of the LUST Tax ..... is it worth it! From what was said in the article ..... NO.
      What does it sould like!
      Just another Government way of taking our money. Tell us one thing then do the other.
      If I had saved that much money and used only a small part of it -- the Government would have come up with a tax to take part of what I was not using.
      • 9 Years Ago
      their is a lot of BS in the auto world. They have had the tech to get more mpg. there was a carb. in 1954 or 55 with a ecconemy driver that got 180 mpg then. they should be up to 65 to 80 mpg today. The mpg on my 1961 6 cylinder 4000 lb. car was 29 mpg 40 years ago. where is the tech-knolege to day?
      don't drive to vegas or fly save fuel. bigeaglecasino.com
      • 9 Years Ago
      Not that BP needs to tap into this fund, but wouldn't it seem to lighten the burden on all of us that pay taxes and purchase gas and diesel, to help offset the cost of clean-up on the Alaskian pipe line?
      • 9 Years Ago
      From what I read above, it sounds like the fund is only available if the owner cannot be located, not for the small business owner whose business went under and certainly not for the big fuel companies. I have zero sympathy for any of the big companies. They've been overcharging us for the past couple years on the premise that if something happened they would have to pay for it.

      I would also love to see a breakdown of what each of the taxes I pay are for. I remember once seeing a gas pump that had a sticker on it from the owner which shared the total amount of taxes that I was paying per gallon.
      • 9 Years Ago
      Wise up folks,we are all a herd of bovines to be exploited, its all about the dollar nothing else so please just chill, out were all on this train wreck and can't get off so enjoy the ride and try to prepare for the sudden stop!
      • 9 Years Ago
      He who dies with the most toys, wins!
      • 9 Years Ago
      My fahter and I had a conversation about the EPA regulation of biofuels (my father is an environmental consultant). The EPA's code says that when it comes to underground storage tanks, any detectable substance is subject to the same regulations in terms of monitoring, analysis, and clean up. The law makes no distinction based on the substances status as biodegradable or not. It would make sense that the LUST tax would cover leakage of all substances and not just petroleum products.
      debbie
      • 9 Years Ago
      The L.U.S.T. tax is just that--the government is lusting after our money!!1 We get worse gas mileage, higher fuel costs--in case you didn't know it--the charge you more for bio-fuels the add to your gas--and we pay higher taxes because they claim they need to do research and development to cut our fuel dependency. You want to cut cinsumption??? Have people work 10 hour days and stagger the work force--it cuts your drive to 4 days instead of 5--a 25% drop. Buy a small care that gets good mileage for transportation to and from small or regular trips that don't require a large gas guzzler. Save the "bus" for moving or grocery shopping or taking a full load of kids and whatever back and forth on a once a week basis--make a list and do all your shopping in one day. Walk the 3 blocks to the c-store for that pack of cigarettes or gallon of milk--it costs as much to go 3 blocks as it does to go 5 miles down the highway. Take the keys away from your teenager. Drop them off on your way to work--have the neighbor's kid bring them home and give them a few bucks for gas! They'll appreciate the gas help and you know yourself--your kids NEVER go straight home--they always have to go running up and down the road to see every other kid in town. The gas companies don't need that money--they're making money hand over fist. And as for refineries--they don't get the tax abatement from the lust tax---it isn't for that. It is your local government that gives them property tax abatements. It is your school kids who lose that money, or social programs--like employment training, or mental health programs--or county hospitals, that loose that money. The homeless could use programs--job development could use it--but when these companies claim they are creating jobs and promise big pay checks to get the abatements, they do it for a year, then hire aliens at a lower pat scale--or fire the ones they hired at start-up at the higher rate and get new employees and pay them less. Its a game. Then when the 5 year abatement is up--they threaten to pull out of the community if the abatement isn't extended! It isn't just oil companies that are doing the economy a disservice--it goes deeper than that. And that OIL SPILL everybody is so concerned about is only a few barrels--they said it is four or five barrels--275 gallons!! You can clean that up with a backhoe and a couple of trucks!!! Its the leaky pipe that is the costly thing! For my money, the could wrap it with duct tapr fo all I care!! They knew there would be repairs eventually--the just do what everybody else does--wait until it is a big leak and then cry they didn't know it would cost so much to fix it and go crying to the feds to get money for that! BP didn't always own that pipeline--but they are getting stuck with the cost of repairs. And the BIG oil spill you should be concerned with is the storage tank that burst in New Orleans during Katrina--owned by Murphy--it spilled thousands of gallons and turned approximately 1/3 of the city into a toxic waste dump. But nobody has said YET how that will be rectified. They could use the lust fund for that--even though Murphy has billions of dallars to open new stores but can't afford the clean-up. Like I say--its a game--and we ALL have antes up, but we just can't beat the dealer!
      • 9 Years Ago
      In Hawaii there is prospect of 2 new Bio Fuel manufacturers getting ready to install plants. Will these manufacturers be granted special tax considerations, and if so, will they automatically be passed on to consumers? For some reason, prices just do not drop herein Hawaii, even with the E-10 fuel now at the pumps. We take a loss of mpg on every fill up, yet the bio fuel gives us less service. I'm for bio fuel, but not loss of mpg without compensation.
      Bill Molinaro
      • 9 Years Ago
      In the frenzy and zeal to reduce dependence on the oil cartel and to use green fuels, many solutions have been offered. These include hydrogen power and ethanol fuel (E85), etc., etc. Lets look at Ethanol: First, it takes more energy to make it than you get out of it and, if you look at the formulae for producing it and burning it, the are carbon atoms throughout which means the dreaded greenhouse gas CO2. In addition ethanol has an affinity for water which means as a fuel it will cause internal engine corrosion and that means modified engines especially where steel or cast iron are present. And to top it off, as a motor fuel it has far less heat content which means your ethanol powered vehicle won't go nearly as far as it would with gasoline. With E85 one can expect a 25% drop in fuel economy and vehicle range . And the grand kicker: It actually can increase smog.

      About hydrogen: Does anyone have a process to produce hydrogen that does not require more energy to make it than you get out of it? I know of none. (Hydro power doesn't count since we already use all of that we can generate.) Until that is accomplished, it is not a viable large scale fuel. It can reduce smog especially in cities such as LA but only if the hydrocarbon fueled generating source required to make it is located outside the smog area. There are fuel cells that make electricity: one proven type uses natural gas, a hydrocarbon fuel (surprise), but they are not cost effective and they also generate CO2.

      I do not demean the search for alternate fuel sources. To the contrary, I do not think we are doing nearly enough. But we will not solve our energy problems by embarking upon solutions that sound great but do not work. Why are auto manufacturers suddenly making E85 vehicles? Is it because they are rewarded with 'excess mileage credits' for doing so? E85 producing plants are in existence mainly because they are subsidized by the fed. One other thought to ponder: Can we afford to destroy most of America's best farmland growing corn for Ethanol? All of this brings to mind an old axiom: If it sounds too good to be true, it probably is.
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