Rigs: The total US rig count decreased to 561 rigs for the week of June 6.
Infrastructure: The FERC’s latest reset of oil pipeline rates could wipe out more than $1B of annual EBITDA upside from the liquids pipeline sector.
Supply & Demand: The US natural gas pipeline sample, a proxy for change in oil production, increased 1.9% W-o-W across all liquids-focused basins for the week ending June 15.
Rigs:
The US rig count decreased by 3 rigs to 561 for the week of June 6. Liquids-driven basins declined from 436 to 434 rigs.
- Anadarko (+2): Freedom Operating Co.; McGinnness Energy
- Eagle Ford (+1): Devon Energy
- Permian (-4)
- Delaware (-1): BP
- Midland (-3): Permian Resources; BlackBeard Operating; Burk Royalty
- Uinta (-1): FourPoint Energy
Infrastructure:
The Federal Energy Regulatory Commission’s (FERC) latest oil pipeline index reset looks small on paper. In reality, it could remove more than $1B of annual EBITDA upside from the liquids pipeline sector by 2028.
On April 24, FERC updated its oil pipeline rate index for the five-year period beginning July 1, 2026, shifting the adjustment factor to the producer price index for finished goods (PPI-FG) -0.55% from the prior PPI-FG +0.78% rate ceiling. The change amounts to only a 133-basis-point annual reduction in allowable indexed tariff escalation, but the impact compounds over time across a massive transportation revenue base.
Under FERC’s indexing framework, liquids pipelines may raise indexed transportation rates annually up to an applicable ceiling level tied to the PPI-FG, plus or minus FERC’s five-year adjustment, so that tariffs keep up with inflation. FERC determines the adjustment factor by comparing pipeline cost-of-service data for the prior five years with the economy-wide PPI-FG data published by the US Bureau of Labor Statistics, yielding a more sector-specific measure of inflation.
The index year runs from July 1 through June 30, meaning FERC’s revised methodology only affects the second half of 2026 before becoming a much larger full-year earnings headwind in 2027 and beyond.
Using East Daley Analytics’ Form 6 liquids pipeline dataset, we modeled the effect across 369 pipeline assets by annualizing 3Q25 results, reflecting incomplete 4Q25 reporting for some operators. The sample generated approximately $45.6B of total revenue, including $40.4B of transportation revenue, and roughly $29.7B of EBITDA. Transportation revenue represented nearly 89% of total revenue, making it the clearest proxy for indexed tariff exposure.
To isolate the impact, East Daley held volumes and operating costs flat and modeled only the change in allowable tariff escalation under the old and new index methodologies. The analysis assumes 2.4% annual inflation and compares the resulting transportation revenue path under the prior and current FERC frameworks.
The result is a meaningful divergence in future earnings power. Under a full-exposure scenario where all transportation revenue is effectively indexed and fully flows through to EBITDA, the revised methodology creates a headwind of roughly $269MM in 2026, $820MM in 2027, $1.4B in 2028, and more than $2.0B by 2029.
Not all transportation revenue is fully exposed to FERC indexing, however. Some pipelines operate under negotiated rates, committed-rate contracts, market-based tariffs or cost-of-service structures, limiting direct index sensitivity. To account for those differences, East Daley modeled three capture scenarios based on varying levels of indexed revenue exposure and EBITDA flow-through.
To be clear, we do not expect EBITDA will decline outright for the affected pipelines vs current levels. Instead, the calculations quantify the reduction in future EBITDA upside relative to the prior index methodology. Operators can still offset the headwind through higher volumes, system expansions, commercial optimization and non-indexed revenue streams. But the revised framework materially lowers the inflation-linked earnings tailwind many investors have historically embedded into liquids pipeline models.
The impact is amplified because the lower index compounds annually. Each year’s reduced ceiling escalation becomes the base for the following year’s rate increase, causing the earnings gap between the old and new methodologies to widen over time. That dynamic explains why the impact appears manageable in 2026 but becomes materially larger by 2028 and beyond.
Past inflationary cycles demonstrate how the sector can meaningfully gain from indexed tariff changes. When inflation rose sharply in 2022 and 2023, many liquids pipelines successfully captured substantial indexed rate increases on uncommitted tariffs, although outcomes varied significantly by basin, contract structure and competitive dynamics. The same mechanism will now work in reverse.
Bottom line: FERC’s new oil pipeline index methodology does not eliminate the inflation protection embedded in liquids pipelines, but it materially reduces it. A seemingly small 133-basis-point reduction in annual indexed tariff escalation translates into potentially a $1B-plus reduction in long-term EBITDA upside across Form 6 liquids pipelines as the lower rate path compounds over time.
Supply & Demand:
The US natural gas pipeline sample, a proxy for change in oil production, increased 1.9% for the week ending June 1 across all liquids-focused basins.
The Gulf of America (+7.6%) posted the largest increase for the week, followed by the Eagle Ford (+4.1%), Anadarko (+4.0%) and the Rockies (+3.5%). Volumes decreased in the Permian (-1.6%), Williston (-1.4%), Barnett (-1.1%) and Arkoma (-0.9%). The Rockies and the Gulf of America have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
As of June 15, there are no current refinery outages.
Vessel traffic monitored by East Daley along the Gulf Coast increased W-o-W. A total of 35 vessels were loaded for the week ending June 13, a large increase from the previous week.