Exxon Mobil Corporation XOM has formally challenged Colonial Pipeline’s proposed overhaul of its fuel shipping terms, arguing that the changes could disrupt supply chains and increase costs for shippers and consumers. The oil major has filed a protest with the Federal Energy Regulatory Commission (“FERC”), becoming the first company to do so.
XOM Says Colonial’s Plan Disrupts Supply Chain
Colonial Pipeline, which spans 5,500 miles from the U.S. Gulf Coast to the East Coast, recently sought FERC approval to eliminate simultaneous shipments of different gasoline grades and reduce the overall number of grades transported. The company claims these modifications will increase fuel shipments and improve efficiency.
However, ExxonMobil contends that the proposed changes would negatively impact the gasoline supply chain by removing a grade it supplies and raising costs to meet new fuel specifications. The company also criticized Colonial’s plan to blend fuel and supply cheaper grades at destination markets while restricting shippers to more expensive grades.
Colonial Stands by Proposal Despite XOM Opposition
Colonial maintains that the changes would optimize its system, enhance fuel availability and minimize operational slowdowns. The company insists that pump prices are primarily driven by supply and demand and that any price fluctuations resulting from the revisions would be minimal and temporary.
The pipeline operator plans to submit its response to FERC regarding ExxonMobil’s protest on Monday. The outcome of this regulatory dispute could significantly impact fuel transportation dynamics along the critical Gulf Coast-to-East Coast corridor.
XOM’s Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Archrock Inc. AROC, NextDecade Corporation NEXT and Oceaneering International, Inc. OII. While Archrock presently sports a Zacks Rank #1 (Strong Buy), NextDecade and Oceaneering each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
NextDecade is an emerging player in the LNG space with its Rio Grande LNG project in Texas. As demand for LNG continues to grow, the company’s strategic investments in infrastructure and planned liquefaction capacity provide strong upside potential. With the global LNG market expanding, NEXT is well-positioned to tap into the increasing export demand from the United States.
Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. With a geographically diverse asset portfolio and a balanced revenue mix between domestic and international operations, the company effectively mitigates risk. As a leading provider of offshore equipment and technology solutions to the energy sector, OII benefits from strong relationships with top-tier customers, ensuring revenue visibility and business stability.
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