FERC Finalizes 5-Year U.S. Oil Pipeline Rate Index

SECAUCUS, NJ (DTN) — The Federal Energy Regulatory Commission (FERC) has announced a new oil pipeline rate index tied to a U.S. inflation marker that could lower the ceiling for transportation costs starting in July 2026.

The revised pipeline index level will be set at minus 0.55% to the Producer Price Index for Finished Goods, with the formula being PPI-FG – 0.55%, the FERC said in a news release Friday (4/24).

“This order should not raise gas prices at the pump, or the price of airfare for ordinary Americans,” FERC Chair Laura V. Swett said. “The reality is that pipeline transportation costs represent a tiny fraction of the total price of fuel from an end-use consumer’s perspective.”

Swett noted that the industry requires proper incentives to maintain the critical network used to deliver affordable gasoline and jet fuel and that the new index aims to reflect real industry cost changes.

FERC opted to trim the data set to the middle 80% of cost changes. This action follows a notice of proposed rulemaking originally issued in November 2025.

The rule will take effect 60 days after its publication in the Federal Register. Under this indexing, oil pipelines charge transportation rates up to these specific applicable rate ceilings.

The order also accounts for a 2020 policy change regarding the allowed rate of return on equity for oil pipelines. This adjustment helps protect shippers from excessive rates while ensuring fair returns.

The commission finalized the rule to ensure oil pipeline indexed rates remain just and reasonable through June 2031. This follows a standard review process that occurs every five years.