July Marks Another Rate Increase for Liquids Pipelines

Stacey Morris, CFA

Tue, July 7, 2026 at 4:00 AM PDT 4 min read

This article was originally published on ETFTrends.com.

July 1 carries a particular significance for many liquids pipelines in the U.S. Each year on this date, these pipelines are able to adjust their rates using an index based on inflation. This July marks the first adjustment with a new five-year level for the index. Today's note provides an overview of the Oil Pipeline Index and why it matters for midstream, especially in periods of inflation.

Key Takeaways

• Liquids pipelines and other assets following FERC's Oil Pipeline Index could increase rates by up to 1.43% on July 1. 

• The increase for July 2026 was the smallest of the last five years. However, rising inflation could drive a more noticeable increase for July 2027.

• Whether based on the FERC index or another metric, long-term midstream contracts typically include an annual inflation adjustment. This and real asset exposure helps midstream/MLPs perform well in periods of inflation. 

What Is the Oil Pipeline Index?

The Oil Pipeline Index is overseen by the Federal Energy Regulatory Commission (FERC). FERC is tasked with ensuring that interstate pipeline rates are just and reasonable for both oil and natural gas. Many pipelines that transport liquids (oil, natural gas liquids, refined products like gasoline and diesel) use the FERC's index, which sets the ceiling for annual rate changes. As discussed more below, other assets use the FERC index as well. The index is based on the Producer Price Index for Finished Goods (PPI-FG) with an adjustment. 

The Oil Pipeline Index is reviewed every five years to ensure that: 1) it appropriately reflects changes in industry costs, and 2) rates remain just and reasonable. The industry-wide index was established in the 1990s to help avoid cumbersome cost-of-service filings and litigation for individual pipelines. 

In April, FERC announced that the index would be based on PPI-FG - 0.55% for the next five years beginning with July 1, 2026. For the midstream industry, this marked a better outcome than the initial index level of PPI-FG - 1.42% that was proposed back in November 2025. In short, annual rate adjustments will be based on inflation, modestly tracking below the change in PPI-FG. 

What Was the Rate Adjustment for 2026? How Does It Compare to Recent Years?

The change in PPI-FG for 2025 is used in the formula to calculate the rate adjustment for 2026. For 2025, PPI-FG increased by 1.979%. Therefore, pipelines following the index were able to increase their rates by up to 1.429% on July 1 (1.979% - 0.55%).