By Ayesha Rascoe
WASHINGTON (Reuters) - President Barack Obama on Thursday will propose a tax break for commercial trucks that run on natural gas, building on his promise to support U.S. shale gas development, senior administration officials said.
In his State of the Union address on Tuesday, Obama acknowledged the nation's booming natural gas sector, which has grown dramatically in recent years as advances in technology have unlocked vast reserves of shale oil and gas.
To take advantage of the newfound natural gas supplies, Obama plans to promote greater use of natural gas as a transportation fuel by offering a tax credit aimed at offsetting the upfront costs of purchasing alternative-fuel commercial trucks, officials said.
Obama will discuss his energy plans during a visit to a UPS facility in Las Vegas, Nevada, that received stimulus funding to invest in liquefied natural gas vehicles and construct a public LNG refueling station.
The president was also to visit Buckley Air Force Base in Aurora, Colorado, where the Air Force is installing a one-megawatt solar array and where last year it test-piloted jets that run on advanced biofuels.
Using domestic natural gas as a "clean" alternative to importing foreign oil has been heavily promoted by Texas oil billionaire T. Boone Pickens and has attracted support from both sides of the aisle in Congress.
Still, Obama's proposal, which would need Congressional approval, likely faces an uphill battle to make it into law.
Similar measures in Congress have failed to break through partisan gridlock, and conservative groups have opposed such legislation on the grounds that government should not be in the business of picking winners and losers in the energy sector.
Increasing domestic natural gas consumption would benefit drillers, as U.S. natural gas demand so far has failed to keep up with the record production increases that have turned the U.S. market on its head.
Producers like Chesapeake Energy are cutting output in the face of the weakest gas prices in ten years, and there is a chance storage may overfill this year, potentially forcing producers and utilities to sell their gas for next to nothing.
As part of its new energy initiative, the Obama administration also plans to support programs that would convert buses and trucks to run on natural gas and to launch a competitive grant program to help communities overcome barriers to natural gas vehicle deployment.
In addition, Obama was to announce that the Interior Department will hold the last scheduled offshore lease sale of the government's current five-year drilling plan in June, offering 38 million acres for development in the central Gulf of Mexico.
(Editing by Gary Hill)