This bill creates a temporary price-based relief system for fuel taxes when gas prices spike. Here's how it works: whenever the national average price of gasoline goes above $3.99 per gallon, the federal fuel excise tax (the tax added to every gallon sold) gets reduced by one cent for every cent that prices exceed that $3.99 threshold. So if gas hits $4.50 per gallon, the tax would drop by 51 cents per gallon. This reduction applies to gasoline, diesel, and other fuels. To make sure highway and environmental cleanup programs don't lose funding, the federal government would transfer money from the general Treasury to replace the lost tax revenue in the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund.

At the same time, the bill prevents oil and gas companies from taking advantage of the situation. During these high-price periods, oil companies would be prohibited from claiming certain tax credits and deductions they normally use. Specifically, they couldn't deduct intangible drilling costs (expenses related to exploring and developing oil wells), couldn't claim the Enhanced Oil Recovery Credit (a tax break for extracting hard-to-reach oil), and couldn't claim the Marginal Well Credit (a tax break for producing from small, less profitable wells). The idea is that when gas prices are high and oil companies are making record profits, they shouldn't also get special tax breaks from the government.

Boyle, Brendan F.

To amend the Internal Revenue Code of 1986 to temporarily suspend certain fuel excise taxes for fuel separated during periods in which the national average price of gasoline exceeds $3.99 per gallon, and to prohibit certain credits or deductions for oil and gas companies during such periods.