Gas and oil tax are normally allocated to the states in which they are extracted domestically. Those tax dollars may also be allocated to negative social or environmental effects resulting from offshore or onshore drilling. Oil and gas tax dollars are not contributed to the development of biofuels. However recently a great deal of energy tax has been contributed to the development of biofuels. In 2009 50% of energy tax was set aside to provide tax credits to companies producing biofuels from the by-product of pulp mills nicknamed “Black Liquor.”
Revenues from fuel tax are deposited into the Highway Trust Fund which is used on road construction and maintenance. About 83 to 87% of the revenue from fuel tax goes into the Highway Trust Fund. However, the remaining 11 to 15% goes into the Mass Transit Account, and about 0.1 cent per gallon is put into the Leaking Underground Storage Tank Trust Fund. I can find no sources that claim fuel taxes are used in the production of natural gas.
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