WASHINGTON, D.C. (RFD News) — Diesel prices remain well above where they were a year ago, with little relief in sight as harvest gets underway.
Mead Hardwick with Hardwick Planting Company said farmers are burning an extraordinary amount of fuel right now, adding significantly to costs.
“We burn a lot of fuel, and because we’re so heavily irrigated, we’ve been burning an outrageous amount of fuel all the way from August. During our peak irrigation, we were burning a transport a week, and that really hurt. That’s 7,000 gallons about every six days when you’ve got about 50-something wells running. That started to hurt pretty quick. I guess I didn’t book enough. I don’t know if anybody saw it going the way that it was, and so it’s almost kind of unbelievable to think that here we are buying diesel for the price we are.”
AAA shows diesel has fallen several cents since yesterday. It is holding at $6.45 per gallon, down from $6.47 yesterday. One month ago, the same gallon cost $5.61, compared with $3.68 a year ago.
The American Farm Bureau Federation has been tracking prices since they began climbing.
Economist Dr. Faith Parum told RFD News the increase couldn’t come at a worse time, with harvest now underway.
“The biggest reason we haven’t seen those prices come down is because we’re seeing a structural supply issue in the economy. Meaning, we’re just seeing a lower supply across the world. Obviously, Russia has limited refining capacity due to the war in Ukraine. The Middle East has stopped refining capacity due to the war in Iran, and then there are additional troubles in the Red Sea. That’s all continuing to bring that supply down worldwide. So, that diesel price is directly affecting your bottom line. Smaller margins to account for how expensive diesel prices have gotten, and that’s on top of already rising production expenses and already rising fertilizer costs, really putting our producers in even further financial pressure.”
Parum said significant uncertainty remains about when diesel prices could return to more typical levels.
“If everything calmed down tomorrow, we would see some of those fuel prices come back down. But of course, there’s a whole lot that is out of the control of farmers and ranchers right now. Continuing to watch the market, see what happens into the next year. We could see some signs of easing, but again, because this is all a global conflict issue, there’s a lot that we just don’t know right now.”
As the White House weighs restricting diesel exports, fuel analyst Patrick De Haan warns the move could worsen supply problems.
He says U.S. refineries already produce far more diesel than the country uses, but much of that surplus is on the Gulf Coast. De Haan says a better approach would be making it easier to move fuel to other parts of the country, warning an export ban could eventually cause refineries to cut production.
