As we mentioned a few weeks ago, the 2016 spending package signed in December lifts the ban on exports of domestic crude oil. Also in the bill is an extension and expansion of the Section 179 tax deduction package. Both items are a net positive for the trucking industry.

Starting with the move to export crude, it is likely that the domestic supply chain will see changes, as oil formerly destined for domestic refineries is shifted to ports for export. This means opportunities may exist for trucking to pick up slack in the pipeline and rail infrastructure. Also, domestic production of crude could ramp back up, which would benefit companies involved in the supply chain. Of course, given the current glut of oil in the world market, there is no urgency for domestic producers to introduce their product into the market. At the same time, any reduction in domestic supply returns producers closer to a healthy business environment.

As for the Section 179 tax deductions, the main write-off is now permanent at $500,000, and will be indexed to inflation. This means businesses can deduct $500,000 worth of equipment each year (albeit with a phase-out of the incentive starting at $2,000,000). Also, the 50% bonus depreciation incentive is in place for equipment acquired in 2015, 2016, and 2017. The incentive decreases to 40% in 2018 and 30% in 2019. Basically, this move gives purchasers of business equipment a more stable outlook for tax benefits going forward.

A third implication of the spending package benefits everyone. That is stability. The government will be funded through September of this year, so businesses and government agencies can plan with more confidence their projections for the fiscal year.