pipeline glut

Energy Regulators May Reconsider Rules Critics Say Fueled America's Oil and Gas Pipeline Glut

Read time: 4 mins
pipeline construction

A little-noticed Federal Energy Regulatory Commission (FERC) announcement could have an outsized impact on the oil and gas pipeline industries — if the commission decides to snap shut loopholes that analysts say create financial incentives to build too many new pipelines in the U.S.

The way the rules are currently written can allow unusually high profit margins for new pipeline projects. Since 1997, FERC has allowed certain new pipelines to rake in 14 percent profits — a rate far higher than the returns presently generated by, say, corporate bonds — with little eye to how that compares to profits available from other investments.

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