Independent Refiners to Feel Tariff Boost

Oil Daily, The, February, 2003 by Christian Schmollinger

Changes made last week in the oil pipeline tariff index will lead to an increase in transportation costs, with independent refiners who lack internal transportation capacity likely facing the brunt of the change.

The Federal Energy Regulatory Commission (FERC) on Feb. 20 decided to implement a new index methodology after complaints were raised by oil pipelines and their trade association, the Association of Oil Pipelines (AOPL), that the returns were not high enough. The old index was based on the Producer Price Index (PPI) for finished goods minus 1%. The index is the upper limit that pipelines can charge under their tariff.

FERC said last week that the new index would be pegged directly to the PPI for finished goods and would take effect for all pipelines...