U.S. liquids pipelines face 1.43% July rate ceiling

On July 1, U.S. liquids pipelines that use the Federal Energy Regulatory Commission’s Oil Pipeline Index were permitted to increase rates by up to 1.43% under the first annual adjustment of the index’s new five-year level.

FERC set the index in April at the change in the Producer Price Index for Finished Goods (PPI-FG) minus a 0.55 percentage-point administrative offset, effective July 1, 2026 for a five-year period. The 1.43% ceiling for 2026 was calculated from a 1.979% PPI-FG increase for 2025 minus the 0.55% offset. The offset will apply through mid-2031.

The industry-wide index, reviewed every five years, provides a cap on annual rate adjustments so pipelines do not need repeated cost-of-service filings. The index was established in the 1990s to streamline ratemaking for interstate liquids pipelines.

About 195 interstate liquids pipelines regulated by FERC use the index for ratemaking. Intrastate pipelines, terminals and storage facilities may incorporate the FERC measure into contract escalation clauses.

Some operators use negotiated or market-based rates instead of the index. ONEOK reported on its first-quarter 2026 earnings call that about 70% of volumes in its Refined Product and Crude segment move under market-based agreements. Enterprise Products Partners noted roughly 90% of its long-term contracts include escalation provisions tied to inflation metrics.

Annual adjustments under the index have varied. The formula produced a 14.3% increase for 2023 following 2022 inflation. Adjustments for 2024 and 2025 were near 2%, and the 2026 ceiling is the smallest in the last five years. Future five-year reviews will use later PPI-FG results to set new index levels.

Investors and analysts monitor the index because many midstream cash flows include inflation-linked provisions and because pipelines and storage are physical infrastructure assets. The Alerian MLP Infrastructure Index outperformed the S&P 500 on a total-return basis in seven of nine years since 2000 when inflation exceeded 3%. The broader Alerian Midstream Energy Select Index outperformed in five of six such years in the available data.

For the immediate term, pipelines tied to FERC’s formula had the option to apply modest rate increases on July 1 that reflect 2025 inflation readings and the commission’s chosen offset.