Fuel Companies Lose Bid for Tax Credit on Butane Blends

Marathon Petroleum Co. and two other companies can’t claim a specialized tax credit for mixing butane with gasoline because butane doesn’t meet the legal definition of “an alternative fuel,” an Ohio federal court said Thursday.

In a consolidation of three cases, Judge James R. Knepp II of the Northern District of Ohio held Marathon, Tesoro Alaska Co., and Tesoro Refining & Marketing Co. can’t claim the Alternative Fuel Mixture Credit because butane—like gasoline—is defined as a taxable fuel under related tax code provisions and regulations, disqualifying the mixture for the credit.

“With this, gasoline and butane are both ‘taxable ...