LUBBOCK, Texas (RFD NEWS) — Rising activity in the oil and gas sector is signaling renewed pressure on farm input costs, as higher energy prices and production expenses begin to work their way back into diesel, fertilizer, and chemical markets.
New data from the Dallas Federal Reserve shows energy activity expanded in the first quarter of 2026, with its business activity index turning sharply positive. At the same time, input and development costs increased, reflecting a more expensive operating environment for energy producers.
That matters on the farm because fuel and fertilizer costs are closely tied to energy markets. Diesel prices have already moved higher, and fertilizer production — especially nitrogen — remains sensitive to natural gas costs.
Oil price expectations near $74 per barrel suggest energy costs are unlikely to retreat significantly in the near term, even as production levels remain mostly flat. Elevated uncertainty in the sector also points to continued volatility.
For producers, the shift reinforces the need to closely monitor input costs as 2026 budgets take shape.
