The average price of diesel is $5.32 per gallon, more than $1.50 above the same time last year. While prices are below the $5.81 peak in June, the high cost of fuel is hitting farmers hard as they navigate the fall harvest season. American Farm Bureau Federation economists analyzed the factors driving up fuel prices in the latest Market Intel report.
A ban on U.S. imports of petroleum from Russia, lower domestic production capacity, and seasonal demand are all contributing to higher costs. Russia provided 20% of the petroleum imported into the U.S. in 2021, but that was halted after Russia’s invasion of Ukraine.
Beyond the impact of Russia, since 2019, U.S. refining capacity has declined, as plants shut during the outset of the coronavirus pandemic, causing prices to spike. Several plants that closed at the onset of the coronavirus pandemic are being converted to produce cleaner-burning renewable diesel, but those facilities are not yet online. Additionally, refiners have entered maintenance season, which further constrains availability. Data from October 28, does suggest that production has picked up somewhat over the last week, suggesting that some refiners have finished their maintenance, with their full production capability back online.
AFBF President Zippy Duvall sent a letter to President Biden today, calling on the administration to bring more domestic supply online, reducing costs to all Americans.
“Our nation’s food supply is driven by diesel,” President Duvall said in the letter. “Every input that arrives on our farms and ranches is transported by a diesel engine, whether that is by boat or barge, rail or truck. Our crops are planted by diesel engines and harvested by diesel engines. High diesel prices are severely impacting our farmers and ranchers, causing increased costs to consumers, and adding to food insecurity.”
National diesel prices are expected to average $4.86 per gallon through the end of the year, according to government projections, and $4.29 per gallon in 2023.