Colonial Pipeline, the operator of the largest refined petroleum pipeline in the United States, is facing significant pushback from major oil companies over proposed changes to its gasoline shipment procedures. The dispute, now before the Federal Energy Regulatory Commission (FERC), centers on Colonial’s plan to streamline its operations by reducing the number of gasoline grades it transports and altering its shipment methodology.

Colonial Pipeline’s 5,500-mile network is a critical artery for the East Coast, carrying approximately 2.5 million barrels of fuel daily from refineries in Texas and Louisiana to consumer markets. Given the closure of several refineries on the East Coast in recent years, the region’s reliance on Colonial’s pipeline has only intensified, making any operational changes a matter of significant economic and logistical consequence.

The proposed modifications by Colonial include halting the simultaneous transport of different gasoline grades and reducing the overall number of distinct grades shipped. The company asserts that these changes will enhance pipeline integrity and reliability, increase capacity, and minimize operational disruptions.

Specifically, Colonial argues that simplifying its shipping practices will reduce "pressure cycling," a phenomenon where fluctuations in internal pressure cause stress on the pipe wall, leading to potential mechanical failures. They claim that these changes will allow them to ship up to 10,000 more barrels of gasoline a day on their main gasoline pipeline, which is almost always utilized at full capacity.

However, major shippers, including Exxon Mobil, Chevron, and BP, have vehemently opposed these changes, filing protest notices with FERC. They argue that the modifications will lead to operational hurdles, increased costs, and potential harm to both shippers and consumers. These companies contend that Colonial’s proposed changes are primarily aimed at boosting its own profits, potentially at the expense of market stability and consumer affordability.

Colonial has countered these arguments, stating that the shippers’ concerns are driven by their own economic interests rather than broader market considerations. The pipeline operator maintains that the proposed changes are consistent with industry practices and fall within its legal authority. They highlight that the increased capacity will ultimately benefit both shippers and consumers by ensuring a more efficient and reliable fuel supply.

One point of contention is Colonial's plan to expand its fuel-blending operations. Shippers argue that this move will give Colonial an unfair advantage. However, Colonial asserts that FERC has explicitly stated that fuel blending is outside its regulatory jurisdiction.