News:
IRS Mileage Information
This revenue procedure updates Rev. Proc. 2003-76, 2003-2 C.B. 924, by providing optional standard mileage rates for employees, self-employed individuals, or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. This revenue procedure also provides rules under which the amount of ordinary and necessary expenses of local travel or transportation away from home that are paid or incurred by an employee will be deemed substantiated under § 1.274-5 of the Income Tax Regulations if a payor (the employer, its agent, or a third party) provides a mileage allowance under a reimbursement or other expense allowance arrangement to pay for the expenses. Use of a method of substantiation described in this revenue procedure is not mandatory and a taxpayer may use actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.
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IRS Boosts Auto Mileage Allowance
DO YOU USE your car for business? Hate keeping records of the actual expenses you pay for the business use of your car? There’s another way to deduct the business use of your car. The optional mileage allowance method is the name of this game.

Use this method and keeping records of each auto expense is history. Instead, only two simple tasks capture your deduction: Keep track of the business miles you drive and then apply the IRS mileage allowance rate. Every year the IRS announces the rate for the next year. The rate may go up, down or stay the same. The rate for 2004 is 37.5 cents per mile; up from 36 cents in 2003.
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IRS Travel Expense Guide
Transportation expenses include the ordinary and necessary costs of all of the following.

Transportation expenses do not include expenses you have while traveling away from home overnight. Those expenses are travel expenses which are discussed in chapter 1. However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. See Car Expenses, later.
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Hybrid Fuel Deduction Underway?
Vehicles in the table to the right may be eligible for a "clean fuel" deduction of $2,000 if placed in service by the end of 2005.

If you purchased the vehicle before 2005, you can claim the deduction by filing an amended tax return for the tax year in which the vehicle was purchased.
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Fuel Taxes
A fuel tax (also known as a petrol tax, gasoline tax, gas tax or fuel duty) is a sales tax imposed on the sale of fuel. Frequently, as in the United States, the funds are dedicated or hypothecated to transportation, or even roads, so that the fuel tax is considered by many a user fee. In other countries, the fuel tax is considered a source of general revenue and is not designated for roads.

In most countries the fuel tax is not imposed on fuel which is not intended for transportation such as fuel used to power agricultural vehicles and home heating oil which is identical to diesel. This creates an economic incentive to illegally use fuel not intended for transportation.

In some regions of the world, differences in fuel taxes between countries result in a significant level of cross-border purchasing of motor fuel. This is particularly true in Europe, where large differences in fuel taxes, coupled with minimal or no border controls, encourage drivers to cross borders for the sole purpose of filling up their tanks with fuel. For example, petrol in Luxembourg is typically around 20% cheaper than in neighbouring Belgium. Since both countries belong to the Schengen agreement, the border crossings are unmanned and almost unnoticeable, except for the large number of petrol stations on the Luxembourg side of the border. In Western Europe, it is mostly small countries and territories (e.g. Luxembourg, Andorra, Gibraltar) that enjoy lower fuel taxes. This is possible because the reduced tax revenue caused by a lower fuel tax is offset by disproportionate numbers of drivers from neighbouring countries entering the small countries to pay the lower fuel tax. Most countries' customs regulations permit the duty-free import of the contents of a vehicle's built-in fuel tank, but there are exceptions. Singapore customs officials check the fuel gauges of vehicles leaving Singapore and require that the fuel tank be at least three quarters full, in order to limit the amount of lower taxed fuel that Singapore residents can buy during short trips to Malaysia.

History
The first U.S. state tax was introduced in February 1919 in Oregon. It was a 1 cent per U.S. gallon (0.3¢/L) tax. In the following decade, all 48 US states and Washington, DC introduced a gasoline tax, and by 1939 an average tax of 3.8¢/gal (1¢/L) of fuel was levied by the individual states.

While state fuel taxes had been around for more than a decade, the first federal gasoline tax in the United States was created on June 6, 1932 with the enactment of the Revenue Act of 1932 with a tax of 1 cent/gal (0.3¢/L). The U.S. federal gasoline tax as of 2005 was 18.4¢/gal (4.86¢/L), and the gasoline taxes in the various states range from 10 cents to 33 cents, with an average about 22 cents per U.S. gallon (5.8¢/L). Unlike most goods in the US, the price displayed includes all taxes, rather than being calculated at the point of purchase.

Fuel efficiency
Fuel efficiency is normally expressed in terms of power per unit of engine displacement, also known as specific output. In the United States, horsepower per liter is a common metric. It should be noted that despite common usage, "fuel efficiency" is not a synonym for "fuel economy" or "gas mileage". Modern fuel injected engines are much more efficient at producing power than their carbureted predecessors. For example, power output from Chrysler's 3.9 L LA V6 engine jumped from 125 hp (93 kW) to 180 hp (134 kW) in 1992 due to the addition of fuel injection and a freer-flowing intake manifold.

However, improvements in fuel efficiency achieved over the last 20 years have not been translated into improvements in fuel economy — much of the savings have been offset by the use of heavier and less-aerodynamic body styles (especially SUVs and pickup trucks) and the use of more-powerful engines. For example, the 6.0 L Vortec V8 used in the Hummer H2 produces 53.6 hp (39 kW) per liter of displacement, which is more than double the 25.4 hp (19 kW) per liter produced by the original VW Beetle. However, the Hummer weighs more than four times as much as the original Beetle, has a much less-aerodynamic body, and uses a complex four wheel drive system, so the Beetle is able to travel three times farther than the Hummer on the same amount of fuel.

Local Gas Saving Tip:
Check your local grocery store for gas coupons and free gas! Many retailers now have gasoline station partnerships and offer deep discounts at the pump for purchases made within the store.

For example Kroger, offers 3 cents off for just having the card, and an additional 10 cents off for every $200 in groceries bought in the store.

Combine this with a Gas Credit Card, and you could save up to 20% in gasoline!!

Gas Price Information:
One of our local radio stations, has been involved in gas/consumer awareness, and lists the lowest prices in the region. Not only does this save gas in the cheap gas hunt, but it may actually reduce the cost of competitors prices.

There are also several resources on the web for this information. Such as http://www.fueleconomy.gov, the United States Department of Energy's Website.

New Car Gas Incentives:
You have to be careful with this one. Many auto dealers off free gas for a year with a new auto purchase. READ THE FINE PRINT! Usually this is either compensated in the interest rates, or is capped out at $600-$1000.

Why are Gas Prices So HIGH!
The price of light, sweet crude oil on NYMEX was under $25/barrel in September 2003. By August 11, 2005, the price had been above $60/barrel for over a week and a half. A record price of $70.85 per barrel was reached on August 29, 2005. While oil prices are considerably higher than a year ago, they are still far from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices".

In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. The average retail price was nearly $3.04 per gallon. The previous high was $1.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.

Demand
High demand is led by the U.S. market, the source of an increasing percentage of world's demand for petroleum. The U.S. economy currently accounts for one-quarter of all demand. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years.

Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to DOE EIA estimates:

• China: 38.9%
• US: 19.4%
• Asia outside Japan and China: 13.8%
• Canada: 4%
• UK: 3.5%
• combined other non-OECD: 21%

Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period.

In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. market. Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.

World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations. This rate of increase is faster than that of any other date in the past. Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in future the world will depend more expensive sources of oil.

The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. One other important cause is the United States dollar's slump against the Euro. Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe.

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