States’ Nonconformity with Federal Measurements Creates “Barrels” of Compliance Costs

The useful part

While this seems like a simple mathematical conversion, the answer is that it depends. The number of gallons in a barrel varies based on what is in the barrel (e.g., alcohol or fuel) and on the jurisdiction in which the barrel is located. However, some states define a "barrel" differently than the standard measurement.

How it works

• Elsewhere in the state statutes, however, a barrel of beer is properly defined to be 31 gallons.
• However, the state's license fees are levied according to the number of barrels a brewery produces per year.
• Similarly, Kansas and Missouri both levy their gasoline inspection fee on a per-barrel basis, which they define to be 50 gallons.
• Administration (EIA) is a federal government entity that collects, analyzes, and makes available all manner of energy-related information and data, including state fuel taxes.
• There is no reason that the answer to "how many gallons are in a barrel?" should depend on jurisdiction.

What to take from it

The landscape of unharmonious units creates complexity and compliance costs for businesses that must pay these taxes in multiple states. "Barrel" Nonconformity Creates Compliance Challenges For each of the units, oil barrels and beer barrels, there are three states that do not conform to the standard measurement. Stay informed on the tax policies impacting you.

Example or evidence

• Last year, the EIA needed to revise previously published tax figures due to non-standard "barrel" provisions.
• For both units, volume standardization facilitated more efficient commerce in the commodities.
• The petroleum producers of the prominent oil region of Pennsylvania got together in 1866 and agreed on the standard oil barrel of 42 gallons.
• This size of barrel was small enough for one person to handle while still being large enough to transport efficiently, among other benefits.

Details worth keeping

Many states levy taxes on liquids on a per-barrel basis. In the early days of the oil industry, container sizes were inconsistent. Association officially adopted the standard in 1872.

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