WASHINGTON, D.C. (RFD News) — Several states are allowing farmers to fuel their trucks with red diesel on roadways as fuel prices climb more than 70% in some states.
Around 10 states, including Alabama, Indiana, Nebraska and Oklahoma, have suspended penalties for using red diesel on highways to help farmers manage fuel costs during harvest. Federal restrictions remain in place, although it is unclear how strictly they are currently being enforced.
The White House has considered a diesel export ban as farmers and ranchers face higher fuel bills.
Geoff Cooper with the Renewable Fuels Association says the move could help lower prices in the short term, but could create problems over time.
“Longer term could have the opposite effect and could actually result in higher prices, especially on the diesel side. Refiners don’t just make diesel. They take a barrel of crude oil and it becomes diesel fuel, gasoline, jet fuel, and a number of other products. Refiners have been pretty clear that if we can’t export diesel anymore, we’re going to reduce our production. We’re going to dial down our crude runs, and that means less diesel fuel, but it also means less gasoline, less jet fuel in the long term.”
Cooper says avoiding supply chain disruptions will be key in the coming weeks and months.
Ethanol production has also slowed, falling to its lowest level since January, while U.S. stocks have dropped to their lowest level of the year.
Demand has shown some strength, with ethanol exports increasing more than 16% and the amount blended into gasoline reaching a four-week high. For corn growers, questions remain over whether that demand can keep up.
