Changes to how Colonial Pipeline ships conventional gasoline grades in April will likely add to already growing gasoline exports, which were projected to reach new highs in December.
Colonial Pipeline in mid-February filed tariff changes to the US Federal Energy Regulatory Commission (FERC) specifying conventional gasoline to shipments of segregated batches between Pasadena, Texas, where the pipeline starts, to its endpoint at Linden, New Jersey, effective 1 April 2025.
The amended tariff requires segregated batches upstream of Meridian, Mississippi, to meet a minimum volume threshold of 50,000 bl from a single origin, while fungible batches downstream must be at least 75,000 bl. Prior to the tariff update, conventional gasoline was shipped in fungible batches, which mandated minimum volumes of 15,000 bl.
By delegating conventional gasoline to larger-volume batches, Colonial has limited the number of small irregular shipments along its line. These shipments risked slowing flow rates and causing pipeline disruptions for a fuel already facing waning shipping demand, Colonial had cited in its tariff to FERC.
The batch consolidation has freed up pipeline capacity and redirected conventional gasoline flows towards exports hubs along the pipeline's route on the Gulf coast, where exports have expanded over the year, despite concerns that the tariff update would raise the shipping costs of conventional gasoline.
Shipments of 87 octane conventional finished gasoline (M grade) have dropped by 77pc since 2015, while those for 93 octane conventional finished gasoline (V grade) have fallen 90pc, Colonial said in its filing. M grade is typically marked as a benchmark for pricing gasoline exports to Latin America as well as a blend stock, while V grade is often used for recreational watercraft.
Since the implementation of the Renewable Fuel Standard in 2005 and the Energy Independence and Security Act in 2007, which required ethanol blending, refiners have favored CBOB and RBOB gasoline as blend stocks rather than M grade gasoline, resulting in lower shipments of conventional gasoline on Colonial Pipeline to key blending operations in the southeast US.
For the first three quarters of 2025, shipments from the Gulf coast to the Atlantic coast totaled 7,000 b/d, but export demand has outweighed domestic demand with Gulf coast gasoline exports averaging 728,000 b/d over the same period, Energy Information Administration (EIA) data show.
US exports of gasoline averaged 1.103mn b/d in the four weeks ending 12 December, which marked the highest for that stretch on record dating back to 2010, according to EIA data. Exports were up by 7.4pc from a year earlier, and up 19pc from the five-year average during that four-week period. Gulf coast gasoline exports typically account for more than 95pc of total US gasoline exports.
Refiners have slashed their offers for gasoline to help entice shipping demand, drawing prices down to four-year lows. Gulf coast conventional 87 octane finished gasoline, a benchmark for pricing gasoline exports, was assessed at $1.66/USG on 16 December after steadily slipping since mid-November. This pulled prices to their lowest point since 12 February 2021, when prices were $1.65/USG.
Gulf coast gasoline shipments have inversely mirrored falling gasoline prices, especially as growing export supplies meet a greater availability of medium-range (MR) tankers and lower freight prices. Monthly Gulf coast gasoline exports reached a 21-month high of 372,000 b/d for the month of November, according to latest preliminary data from analytics firm Kpler.
With even lower conventional gasoline prices further widening transport arbitrage, market participants have said they expect December exports to outstrip November levels for the Gulf coast and could accelerate into January.
