Fuel

Diesel Prices Are Breaking Records Across Multiple States, And Relief May Not Come in 2026

Wed, 06 May 2026 12:53:38 GMT

On Tuesday, President Trump stated that high gasoline prices are a “very small price to pay” for the ongoing war with Iran, arguing they are necessary to prevent Iran from obtaining a nuclear weapon. He predicted prices will “come crashing down” once the war ends. But for farmers and ranchers, diesel prices have risen more than gas, putting a further strain on already high input costs for 2026.

Trump on Oil Prices:

I looked today, it's like at 102 and that's a very small price to pay pic.twitter.com/2V8LC93wFj
— Acyn (@Acyn) May 5, 2026

To start the week, diesel prices went on another run with the national average diesel price is just 20 cents away from reaching a new all-time high. And across the country, a growing number of states aren’t waiting to get there. About six states are already seeing the national average price of diesel reach record highs.

From the Great Lakes to the West Coast, roughly a half dozen states have already smashed previous records, as a late-April dip in prices quickly faded and a fresh surge took hold.

“Diesel now averaging about $5.65 a gallon nationally. That is only about 20 cents away from a new all-time record high,” says Patrick De Haan, head of petroleum analysis at GasBuddy . “So even though we had that short-lived break, we’re right back knocking on the door of records again.”

That “break” didn’t last long. De Haan says even though diesel prices saw a bit of a respite for April, with even prices starting to trend down in mid-April, those prices re-accelerated in the last week.

New records for diesel in:
Michigan, $6.01
Illinois, $6.01
Wisconsin $5.67
(Indiana 0.2c/gal away), $6.03
(Ohio ~19c/gal away), $5.93 https://t.co/DV0387vvMR
— Patrick De Haan (@GasBuddyGuy) May 5, 2026

Now, the rally is showing up in state-by-state records, especially in the Midwest.

“Looking at it state by state, Great Lakes states have seen some tremendous refining issues that have really caused prices to rise dramatically,” he says. “Michigan has now set a new all-time record high for diesel over $6. Indiana is just a few tenths of a penny away from setting a new all-time record. Illinois has set a new all-time record. Wisconsin has set a new all-time record.”

And it’s not just a regional story. States in the West were some of the first to not just see the highest prices, but now also hit record levels.

“Out on the West Coast, Arizona set a record a couple of weeks ago, and Washington state is at an all-time record,” he adds. “So there are probably about a half dozen or so states that have set new all-time records, and again, the national average itself is just 20 cents away.”

Perhaps the most telling shift, though, is there’s no longer a low-price refuge.

“No states any longer have diesel averaging below $5 a gallon,” De Haan says. “Texas was the last holdout, and it now is above $5 per gallon. So across the board, $5 diesel is now essentially the floor, and in some areas, that’s actually the cheaper end of the spectrum.”

At the high end, prices are reaching extremes with California’s average diesel price now surpassing $8 per gallon.

Global Tensions Cloud Relief Outlook

With prices continuing to climb, farmers are looking for relief. What would it take to reverse course? That answer remains tied to global uncertainty.

“Relief may be a little bit elusive,” De Haan admits. “It really just depends on the daily developments in the situation between the U.S. and Iran—whether the Strait is open or not, or whether we’re in phases of escalation.”

The Strait of Hormuz remains a critical chokepoint for global energy supply, moving roughly 20 million barrels of oil per day.

“Nothing else matters to the oil market more than this waterway,” he emphasizes. “We’ve seen attacks that have pushed oil prices higher, which in turn pushes diesel wholesale prices up. You may get a little bit of day-to-day relief, but there really is no ‘coast is clear’ until there’s some sort of definitive resolution.”

And even then, he says a turnaround won’t happen overnight.

“If there is a definitive signal to the market, if the Strait reopens and both sides are aligned, prices could start falling within 48 hours,” De Haan explained. “But the rate of decline is likely to slow after that initial drop.”

Prices Likely to Remain Elevated Through 2026

Not only is the rate of decline projected to be slow, but De Haan says diesel prices aren’t likely to drop back to pre-war levels by the end of the year.

“Roughly half of the increase we’ve seen over the last couple of months could come down within the first few months of positive news,” he said. “But the other half could take many more months. We may not get back to pre-conflict diesel prices until late this year—or even into 2027.”

For agriculture, that prolonged stretch of elevated prices carries real consequences.

“When you look at what comes out of a barrel of oil, diesel only makes up about 25%,” De Haan explained. “Gasoline is a larger portion, so it’s been less impacted. Jet fuel, which is an even smaller share, has been hit the hardest. So it’s almost inverse to how much is produced.”

Why Diesel Is Climbing Faster Than Gasoline

If it feels like diesel prices are rising faster and hitting harder than gasoline, there’s a reason rooted in how a barrel of oil gets used.

“Diesel has seen more of the sticker shock compared to gasoline,” says De Haan. “And a lot of that comes down to what comes out of a barrel of oil.”

Not all fuels are created equally in supply. Gasoline makes up the largest share of a refined barrel, while diesel represents a smaller slice, making it more vulnerable when supply is disrupted.

“Gasoline is the top product flowing out of a barrel of oil, so it’s been the least impacted,” De Haan explains. “Diesel, on the other hand, only accounts for about 25% of a barrel, so it’s been more impacted when there are supply issues.”

That imbalance becomes even clearer when looking across the full spectrum of refined fuels.

“The most significant impact has actually been to jet fuel, which is only about 9% of a barrel,” he adds. “So if you look at it inversely—the smaller the share of the barrel, the bigger the impact we’re seeing right now.”

For agriculture, that dynamic matters more than most sectors.

Diesel isn’t optional on the farm. It’s essential. From planting to harvest, it powers tractors, trucks and the supply chain that moves commodities across the country.

“Diesel is the fuel that drives agriculture,” De Haan say. “And that’s why these price increases are so impactful, not just at the pump, but all the way through the economy.”

And while prices are already elevated, the full effect is still working its way downstream.

“Consumers really haven’t even seen the full onset of some of these higher prices yet,” he adds. “That’s going to continue to trickle through in the weeks ahead.”

Demand Holding...for Now

Even with these high prices, so far, demand hasn’t shown many signs of slowing.

“We have not seen much meaningful decrease in demand yet,” De Haan says. “We’ve seen very little, if any, diesel demand destruction so far, which tells you the economy is essentially preparing to pay these prices because it still needs the fuel.”

But there are warning signs ahead.

“If diesel nationally hits $6 a gallon, that’s likely when we start to see consumption slow,” he says. “For gasoline, that number is about $5 a gallon. We’re getting very close to those thresholds.”

Until then, the pressure continues to mount. And for farmers heading deeper into the growing season, that pressure is becoming harder to ignore.

Diesel Prices Spike on Iran Conflict Just Ahead of Planting Season

Wed, 04 Mar 2026 15:56:36 GMT

Diesel prices spiked more than 60¢ combined on Monday and Tuesday.

It is a direct result of the supply cutoff through the Strait of Hormuz, says Alex Hodes, director of market strategy – energy with StoneX Financial Inc. Refined product movement is concentrated in the Strait, making this one of the biggest global disruptions for the oil market.

“A large amount of refined products, specifically diesel and jet fuel, transport through this Strait. That closure is causing panic in buyers of Middle Eastern diesel, one of which is Europe, which is kind of the primary maker of diesel prices globally. That’s dragging on NYMEX heating oil diesel prices as well,” Hodes says.

Nationwide Diesel Prices Up Sharply from 2025

After rising 10.8¢/gal. on Monday, the national average price of diesel rose another 8.1¢ Tuesday afternoon. It reached $3.929/gal. — a rise of almost 20¢ in two days, writes Patrick DeHaan, head of petroleum analysis at GasBuddy, in a post on X.

Data from the Energy Information Administration (EIA) shows the national average diesel price on Tuesday was up 31¢/gal. from a year ago.

Meanwhile on Wednesday morning, NYMEX heating oil futures were up nearly 68¢ from Friday at $3.26/gal. Diesel prices are based on these futures.

When compared to a year ago, NYMEX heating oil prices were up over 90¢/gal. and have risen $1.21 since December 31.

(Barchart )

They Could Climb Higher

Hodes thinks there is more upside potential for diesel fuel prices.

“Yes, I think there’s still risks that are in the market and have not really come to fruition quite yet. So ultimately, with the Strait of Hormuz closure, the question will be how long will that last,” Hodes says.

Some relief may come following a Tuesday afternoon post from President Donald Trump. He ordered the U.S. Development Finance Corporation to provide political risk insurance and guarantees for the financial security of all maritime trade at a reasonable price. He added that, if necessary, the U.S. Navy would escort tankers through the Strait.

While that will help lower the insurance costs to allow oil tankers to pass through the Strait, the shipping industry sees this as only a partial solution to the historic crisis.

“One other factor is that several Middle Eastern refineries have been attacked, and that’s over 1 million barrels per day almost offline due to those attacks. So, additional Middle Eastern refineries could be at risk, and that’s another bullish factor there,” Hodes says.

Diesel Prices Rise More Than Other Energy Products

He adds diesel has risen disproportionately more than other energy products. This is partly due to tighter global inventories.

“But the biggest one is that there’s more diesel products flowing through the Strait of Hormuz than gasoline or some of the lighter counterparts,” Hodes says.

And Asian refineries, particularly in Japan and China, have also announced they could reduce run rates at their refineries if the disruption lasts.

The Price Hike Comes at Crunch Time for Farmers

The higher prices come as diesel demand ramps up for planting.

“It is a tough time to lock in fuel costs specifically, you know, in the start of March now. So, it’s not a great time to be a consumer of fuel,” Hodes says.

Unfortunately, few farmers locked in diesel prices when they hit lows in December and early January. This was just before the polar vortex rallied prices.

It is another expense they can’t afford when farmers are moving into the 2026 growing season already facing slim-to-negative profit margins.

Farmers, Truckers and Gear Heads Rejoice: EPA Rolls Out Streamlined Diesel Engine Fluid Guidelines

Tue, 12 Aug 2025 18:04:22 GMT

EPA is rolling out new guidance for manufacturers of farm equipment and other heavy-duty vehicles, removing regulatory red tape requiring diesel-powered farm equipment to reduce engine torque dramatically when a problem arises with the machine’s Diesel Exhaust Fluid (DEF) system.

You can read EPA’s statement on the announcement here.

The new rule making goes into effect immediately for all new diesel engines on model year 2027 machines. It should also be noted the new guidance from EPA is voluntary for all non road equipment. Ultimately, each manufacturer will have the right to choose whether it implements the new inducement strategy or maintains the status quo with its own machines.

To fix the problem for farm machinery already in the field, EPA’s new guidance, developed in collaboration with farm equipment manufacturers, will work to ensure necessary software changes can be made on the existing fleet.

(EPA)

EPA administrator Lee Zeldin says now all non-road equipment, like farm tractors, combines and sprayers, must be configured so there is no impact on engine power for up to 36 hours when a DEF system malfunction occurs. Once 36 engine hours have passed, a 25% reduction in engine torque will go into effect until the machine is serviced. If the farm equipment is not fixed within 100 engine hours, then a 50% reduction in torque is activated until the machine can be serviced.

Additionally, farm equipment can be restarted with full engine power three times for up to 30 minutes after inducement, according to the EPA release.

“This is the first crack in the ice toward saying we don’t need these expensive systems on our farm equipment,” says Ben Reinsche, owner, Blue Diamond Farming Company in Jesup, Iowa. “We don’t need to immediately shut off an engine or be restricted for 36 hours if you have DEF unavailable or a malfunction.

“This is a positive step and maybe a formative step toward saying that having these emission standards on farm or off-road equipment is not critically necessary,” adds Reinsche. “There are so many other things farmers can do that are planet positive, like using conservation and sustainability practices, rather than having an after treatment system on our diesel engines.”

Small Business Administration (SBA) leader Kelly Loeffler says the new rule will save 1.8 million family farms across America a staggering $727 million per year while offering “vital financial and operational certainty.”

“This announcement today is such a big deal, especially on behalf of our farmers and ranchers,” says USDA secretary Brook Rollins. “At a time when our ag sector is really hurting, our farmers have had to endure a 30% cost increase in inputs, and a $30 billion Biden-era trade deficit, these everyday regulations being lifted makes such a difference.”

The new guidance greatly reduces a machine setting known as DEF derating and allows operators more time to secure DEF, refuel and make repairs. The new guidance also reportedly retains the environmental benefits of Tier 4 engine and DEF regulations for farm equipment and trucks.

“Today we are taking another important step forward by undoing these diesel fluid guidelines that have hurt our farmers and small rural businesses,” says U.S. Senator Joni Ernst (R-Iowa). “Not only will these new guidelines save family-run farms hundreds of millions of dollars per year, but it is also just common sense, folks. No farmer should have their tractor come to a halt in the middle of a field due to Green New Deal-style regulations from Washington.”

How Did We Get Here?

EPA ushered in DEF requirements for large farm equipment when it enacted broader Tier 4 emissions standards in 2004.

Tier 4 Interim rules, which required DEF for farm machines 750 horsepower and up, then went into effect in 2008.

In 2015, EPA’s final Tier 4 regulations were put in place, meaning all new non-road diesel engines — regardless of horsepower rating — had to comply with new emissions standards.

Curious where your farm equipment is made? Check out Farm Journal’s “Who Makes What Where” feature to learn more.

Why Do Many Farmers Hate Using Diesel Exhaust Fluid (DEF)?

American farmers say they detest using DEF due to the challenges and additional fuel cost it tacks onto their operations.

Here are some reasons farmers aren’t big fans of DEF:

Higher Costs and More Maintenance: DEF adds on extra materials costs for machinery-based field work. Farmers must purchase large amounts of fluid, and the Selective Catalytic Reduction (SCR) framework that processes DEF is prone to malfunctions and expensive to repair. Often a simple-but-unexpected repair can pop up out of nowhere and end up costing farmers thousands of dollars and leave equipment inoperable.
Field Work Interruptions: If a tractor runs out of DEF or if the system breaks down, under the now-defunct previous guidelines engine power was greatly reduced, which is known by many farmers as “going into limp mode.” For farmers who rely on their equipment to operate consistently and reliably during planting and harvesting, any issue quickly becomes a major headache.
Storage Issues: DEF has a limited shelf life and is sensitive to temperature ups and downs. A quick Google search says DEF freezes at around 12°F and can degrade if stored in temperatures above 86°F. And who wants to look at a giant pallet of DEF cartons stacked in their machinery barn? Nobody, that’s who.
Contamination/Quality Control: DEF fluid must be pure and free of contaminants. Accidentally using the wrong type or getting foreign substances in the tank during refilling can wreak havoc throughout the system, leading to repairs and downtime.
Engine Performance Concerns: There are farmers who believe newer emissions systems, including those that use DEF, reduce the machine’s total power output and lower fuel efficiency.

Your Next Read: MAHA Policy Announcement Delayed, Agriculture Waits For Any Implications From Earlier Report

Biden to Call on Congress to Suspend Gas and Diesel Tax This Summer

Wed, 22 Jun 2022 14:04:50 GMT

President Biden is expected to call on Congress to suspend the federal gas and diesel taxes for the next three months, the latest effort by the White House to provide relief to Americans struggling with record-high gasoline and diesel prices. The move is contingent on legislative action, which would temporarily lift the 18.3 cents tax per gallon on gasoline and 24 cents tax per gallon on diesel during the summer months.

The three-month timeframe was specifically to address the surging gas demand during the summer months when travel increases. In the longer term, however, a Biden administration official acknowledged the revenues from the tax are a vital source of infrastructure funding.

Biden will lay out the proposal in a speech from the White House this afternoon when he will also call on states to suspend their gas taxes or provide rebates or other forms of relief, the official said. Additionally, Biden is expected to call on oil refinery companies to take steps to boost production.

Biden will also ask Congress to replenish the Highway Trust Fund, which is supported by gas taxes, with other revenue to make it “whole” amid a gas tax suspension. The White House estimates it would take about $10 billion to do so. That may be a way to garner some additional Democratic votes for the gas and diesel tax suspension.

Energy Secretary Jennifer Granholm is separately holding a meeting with oil executives on Thursday to discuss ways to reduce gasoline and diesel prices, after Biden sent a letter to seven major companies demanding they take action to help lower costs for consumers. Executives from Exxon Mobil, Shell, Valero, Marathon, Phillips 66, BP and Chevron are slated to attend the meeting, the White House said.

Impact: When some states opted to suspend their own fuel taxes in the past, sometimes prices came back higher, according to a study released last week from the Wharton School at the University of Pennsylvania.

American drivers are starting to buy less gasoline as they feel the economic burden of record prices that continue to hover near $5 a gallon. In the first full week of June, gasoline sales at U.S. stations were down about 8.2% compared with the same week last year — the 14th consecutive week that sales have lagged behind 2021 levels, according to surveys by energy-data provider OPIS. In the week ended June 10, the Energy Information Administration’s measure of implied demand — an estimate of products supplied to consumers — declined by roughly 110,000 barrels a day from the prior week, to about 9.1 million barrels a day. That figure is down from about 9.4 million barrels a day the same time last year.

The WSJreports ( link ) that drivers have begun consolidating trips or filling up their tanks with only as much fuel as they need to get by for a few days. Some are carpooling or taking mass transit, while others are working from the office for fewer days each week.

Diesel Prices Smash Another Record — And the U.S. is Now One Hurricane Away from Running Out of Diesel

Fri, 03 Jun 2022 22:18:19 GMT

Diesel prices smashed another record Friday, with prices hitting $5.58 a gallon. With NOAA predicting an above-normal hurricane season, it’s not good news for crop production close to the Gulf Coast or for already short diesel supplies.

The start to the hurricane season is underway. As of Friday, more than 10 million people in southern Florida, Cuba and the Bahamas were under a tropical storm warning for the weekend.

If the tropical storm would track farther west, it could spell trouble for diesel supplies as experts say the U.S. is one hurricane away from a shortage this year.

“We’re probably one Category 3 storm away [from a shortage], and that Category 3 storm would have to take aim for an area roughly from the Mississippi river to Houston,” says Patrick De Haan, head of petroleum analysis, GasBuddy . “That’s the really sensitive area. Not only could it affect refining, but it could affect offshore oil production.”

A Category 3 is the third-highest classification on the Saffir–Simpson hurricane wind scale, which brings tropical cyclones with at least 1-minute maximum sustained winds between 110 mph and 129 mph.

Just How Tight Are Supplies?

Diesel supplies are vulnerable due to how tight supplies are today.

“This is the year we’re running very low on inventory entering the summertime and any type of impact on refining capacity is really going to increase the chance of the shortage,” says Debnil Chowdhury, vice president, head of Americas Refining, S&P Global Commodity Insights

Why have diesel prices raced higher and fears of a diesel shortage sprouted? It’s largely due to a shortage of refining capacity, not a shortage of oil.

“The nation is dealing with about a million barrels a day less of capacity than we had just three years ago. That’s the equivalent of about 5%,” De Haan says. “Not only is oil a problem with the sanctions on Russia’s oil, but turning that oil into something like gasoline and diesel is also now a choke point.”

Hurdles in Increasing Production

S&P Global Commodities is also watching the situation. At a time when the U.S. is typically building inventory, it seems hurdle after hurdle is making that more difficult.

“Refineries have less capacity; we have about 1.2 million barrels a day of less capacity because of shutdowns that occurred prior to the pandemic,” Chowdhury says. “Also during the pandemic, we’ve had some convergence to biofuels facilities as well as a refinery that was hit by a hurricane and damaged to the point where it can’t really be run anymore.”

Still Recovering from Hurricane Ida

Another issue is refineries hit by Hurricane Ida last fall that never came back online. That major hurricane, and the devastation it caused, was one of the initial dominoes to fall for diesel prices.

“This all actually started before the war. It began in October of last year, when natural gas prices in Europe started to rise,” Chowdhury says. “The cost of natural gas increased substantially in Europe and why that’s important to a Midwest farmer is because the cost of producing that diesel increased with it.”

There’s talk of the Biden administration tapping into diesel reserves to help ease supply concerns, but De Haan says not only will that move have a minimal impact, it’s also a question of timing.

“It’s only a million barrels, so it’s not a infinite amount of supply,” he says. “The worry is that if we release those barrels of diesel now from areas in the Northeast, we’re also in the start of hurricane season. Now we do have some tropical activity. So when do you use the inventories? Do you use them now because of high prices? Or do you wait for a bigger potential issue later this summer?”

Diesel Price Pain to Last for Two Years?

While a possible diesel shortage is looming, diesel prices aren’t forecast to see a dramatic drop anytime soon.

“These prices are not going to go back to the levels we had at the beginning of 2021, it’s more likely that we’ll see maybe, you know, a $5 to $10 decline in crude price, and that would equate to maybe 50¢ to 60¢ on the diesel price itself. We’re not talking about a major relief,” Chowdhury says.

On the heels of diesel prices climbing higher again this week, anyone hoping for relief might have to look out beyond this year.

“It could take a couple of years, and keep in mind, the longer we go down this road that demand eclipses supply, the more catching up we’re going to have to do,” De Haan says.

John Phipps: It's Now Less About the Supply of Oil, And More About Refining Capacity in the U.S.

Thu, 14 Jul 2022 20:42:26 GMT

Infuriating price increases are the topic of the day and but like the 80’s rising inflation is driven largely by energy. The price of oil is a huge factor in about everything we buy. Oddly enough, it is now less about the supply of oil, and more about refining capacity.

Refining capacity starts with the number of operable plants, which has been slowly falling for years. The pandemic oil demand plunge prompted the closure of some refineries, especially older, less efficient ones.

Starting up a shutdown plant is a long and difficult process, so industry analysts doubt any of them will ever reopen. Add in a hurricane in Louisiana and an explosion in a Philadelphia plant and our capacity to refine is at an 8-year low. Keep in mind there has not been a new refinery built since the 1970’s in the U.S.

The operating plants are running at historically high levels as well. Now imagine you are an oil executive and your financial staff just brought in the latest profit figures shown here and your neighbor took delivery of a Rivian electric pickup. What possible logic would make you consider building or even upgrading any of your refineries?

Whether we think EVs are the future or not, the oil industry looks at the car industry and sees a future of stagnant if not falling demand. The amount of oil available, and the price, is of course a factor, but it sure hasn’t hurt refiners’ profits, so why do anything other than milk this elderly cash cow as long as possible? The implication for me is it’s hard to imagine gas prices falling much without a pretty stiff recession stifling demand. For that matter, if fuel demand should decline, I think refiners will simply accelerate plant closures. Investors agree and would not reward an oil company building or upgrading for new capacity. The refinery bottleneck also means efforts to increase the oil supply may not have much effect. It’s like getting a bigger combine when your trucking capacity is the problem.

The switch to EVs will not be as rapid as many think, and even less so in rural America, but we’re close enough to the peak of oil demand for transportation at least to have a big impact on long term plans in almost all sectors.

And by the way, I saw my first local Rivian and have neighbors on the list for electric F-150s. At the same time solar panel installations are popping up at farms like waterhemp. High energy prices can change attitudes.

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Tue, 14 Jun 2022 14:04:57 GMT

Gas prices keep crushing records in the U.S., but diesel prices are posting even more sticker shock as fears of a possible diesel shortage this year are also causing concerns. It’s not just retail diesel prices that are rapidly rising. There are now reports of farmers booking off-road diesel for farm use trending above the $5 mark, too.

(Farm Journal)

It’s an issue facing the trucking industry from coast to coast. AAA reports the national average diesel price is now $5.77 a gallon. A year ago, it was $3.21.

“It’s almost like every five minutes, I see the little live indicator tick up on our GasBuddy data,” Patrick De Haan, head of petroleum analysis, GasBuddy , told U.S. Farm Report two weeks ago.

GasBuddy tracks both diesel and gas prices in real time. And while the pain at the pump is something drivers are seeing across the country, it’s also an issue plaguing agricultural producers across the U.S.

“We had some farm diesel delivered yesterday, and it cost us $4.85 or $4.89 a gallon delivered. Two years ago, we bought fuel for just over $1,” Craig Moss, a farmer in Hull, Iowa, told Farm Journal’s Michelle Rook.

The rapid rise in input prices is eating into outlooks this year, even with high livestock and grain prices.

“It’s a challenging market, no doubt, buying $8 corn and $5.50 diesel; it’s a tremendous challenge for producers,” says David Newman, a pork producer in Myrtle, Mo.

While prices at the pump for both gas and diesel climbed this week, it’s a similar story for off-road diesel prices. A survey of farmers on Twitter drew a wide range of responses regarding the prices they are currently seeing. Farmers reported off-road diesel at $4.13 in the northern Corn Belt, while off-road diesel is now above $5 for those further east and in western states like Montana.

Research by Texas A&M Agricultural and Food Policy Center (AFPC) shows farmers are seeing nearly every input cost on their farm rise this year. Nitrogen prices produced the biggest increase, up more than 133% per acre year-over-year. Phosphorus and potassium fertilizer were up nearly 93% during that time. That was followed by fuel and lube, which jumped more than 86% compared to last year.

(Farm Journal)

The latest baseline projections from the University of Missouri Food and Policy Research Institute (FAPRI) also shows the sharp rise in fuels costs today.

“A 57% increase may or may not capture what’s happening right now throughout the whole calendar year of 2022, but it is capturing at least the part that we’re seeing right now,” says Bob Maltsbarger, a senior research economist with FAPRI.

FAPRI’s baseline projection shows even if fuel prices retreat the second half of this year, higher overall production costs will continue to sway balance sheets. Maltsbarger points out diesel prices vary by not only geography, but also by farm, especially considering crops like corn typically require more fuel use.

“It will vary quite a bit on the dollars-per-acre impact, but if you have about an equal increase on a percentage change basis, you will see those dollars per acre be more expensive in this calendar year,” he says.

Why Are Diesel Prices So High?

Why have diesel prices raced higher this year? It’s largely due to a shortage of refining capacity, not a shortage of oil, but the prices started to climb higher long before Russia invaded Ukraine.

“The nation is dealing with about a million barrels a day less of capacity than we had just three years ago. That’s the equivalent of about 5%,” De Haan explains. “So, not only is oil a problem with sanctions on Russia’s oil, but turning that oil into something like gasoline and diesel is also now a choke point.”

“Refineries have less capacity; we have about 1.2 million barrels a day of less capacity because of shutdowns that occurred prior to the pandemic,” says Debnil Chowdhury, vice president, head of Americas Refining, S&P Global Commodity Insights. “Also during the pandemic, we’ve had some convergence to biofuels’ facilities as well as a refinery that was hit by a hurricane and damaged to the point where it can’t really be run anymore.”

S&P Global Commodities is also watching the situation. At a time when the U.S. is typically building inventory, the opposite is occurring, which is also heightening concerns about a possible shortage.

“This is the year we’re running very low on inventory entering the summertime, and any type of impact on refining capacity is really going to increase the chance of the shortage,” says Chowdhury.

One Hurricane Away from a Diesel Shortage?

With supplies already tight, De Haan says the U.S. can’t afford to lose any refining capacity, which is a major risk considering NOAA is projecting an above-normal hurricane season.

“We’re probably one Category 3 storm away [from a shortage], and that Category 3 storm would have to take aim for an area roughly from the Mississippi River to Houston,” says De Haan. “That’s the really sensitive area. Not only could it affect refining, but it could affect offshore oil production.”

One of the reasons inventories are already tight is due to Hurricane Ida making a direct hit along the Gulf Coast. Refineries located near New Orleans went offline last fall, with some still not back online today. That major hurricane, and the devastation it caused, was one of the initial dominoes to fall for diesel prices.

“This all actually started before the war. It began in October of last year, when natural gas prices in Europe started to rise,” Chowdhury says. “The cost of natural gas increased substantially in Europe, and why that’s important to a Midwest farmer is because the cost of producing that diesel increased with it.”

Searching for Solutions

While the financial incentive is there today to pump more oil and increase refining capacity, one worker in the oil industry told U.S. Farm Report that the push to electric has investors concerned about the risk of such an investment. And considering it takes years for refining capacity to come online, that’s also not a solution today.

There’s talk of the Biden administration tapping into diesel reserves to help ease supply concerns, but De Haan says not only will that move have a minimal impact, it’s also a question of timing.

“It’s only a million barrels, so it’s not a infinite amount of supply,” he says. “The worry is that if we release those barrels of diesel now from areas in the Northeast, we’re also in the start of hurricane season. Now we do have some tropical activity. So when do you use the inventories? Do you use them now because of high prices? Or, do you wait for a bigger potential issue later this summer?”

(Farm Journal)

In order to relieve the tight diesel supply situation, Chowdhury points out the other option is for the government to wave the Merchant Marine Act of 1920, otherwise known as the Jones Act.

“The U.S. refiner now has to decide do we send product to Europe? We can send it via pipeline easily, but because of the Jones Act, which is a regulation that mandates U.S. flagged vessels from port to port, it’s not something that we could do now. And that’s something that the government could look at waving if we do face a shortage,” says Chowdhury.

The Jones Act is a federal statute that was established more than 100 years ago. It requires all vessels carrying good between two U.S. points be American-built, owned, crewed and flagged. The policy was created to help sustain American jobs, and in turn, generate economic benefits each year. Proponents claim the Jones Act has secured critical movement of goods over the years.

How Long Could the Diesel Price Pain Last?

While the industry searches for possible solutions, those who follow and track refineries don’t see a dramatic drop in diesel prices anytime soon.

“These prices are not going to go back to the levels we had at the beginning of 2021. It’s more likely that we’ll see maybe, you know, a $5 to $10 decline in crude price, and that would equate to maybe 50¢ to 60¢ on the diesel price itself. We’re not talking about a major relief,” Chowdhury says.

On the heels of diesel prices climbing higher again this week, anyone hoping for relief might have to look out beyond this year.

“It could take a couple of years. Keep in mind the longer we go down this road, and that demand eclipses supply, the more catching up we’re going to have to do,” De Haan says.

Diesel Prices Up 78¢ from January 2022

Tue, 07 Feb 2023 14:14:11 GMT

According to the Energy Information Administration , the average U.S. price of diesel ran $4.62 a gal. in the week that ended Jan. 30, up 78¢ from a year earlier. On the East Coast, diesel sold for $4.84 on average, a 98¢ annual jump.

Will Electric Vehicles Actually Drive Down Prices at the Pump?

Meanwhile, Europe has announced a ban on Russian diesel fuel and other refined oil products--a move that will further curb its own energy dependence on Russian energy, while attempting to limit Russia’s gains from it’s energy sector. The ban allows for a 55-day grace period for diesel loaded on tankers prior to Sunday.

The move comes shortly after G7 countries announced a price cap on refined Russian oil products, which took effect on Sunday. Fuel oil and other low-value exports will be capped $45. A cap of $60 already applies to Russian crude.

Are Landlocked Soybean Crush Facilities Destined to Survive?

Insurers and shippers are prohibited from dealing in items covered by the cap unless they were bought below or at the designated price.

Filling A Tractor Tank Daily Now Costs Some Farmers $1,000, Double What It Did a Year Ago

Fri, 20 May 2022 20:17:40 GMT

Filling a tractor tank daily now costs some farmers $1,000, twice what it was a year ago. And the most intensive part of the farming season is still ahead.

U.S. diesel prices are the highest ever, with warnings of shortages, especially in the eastern U.S.

“Diesel is the lifeblood of farming,” Iowa corn and soybean farmer Ben Riensche told Bloomberg.

Fuel

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Demand Holding...for Now

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Nationwide Diesel Prices Up Sharply from 2025

They Could Climb Higher

Diesel Prices Rise More Than Other Energy Products

The Price Hike Comes at Crunch Time for Farmers

Farmers, Truckers and Gear Heads Rejoice: EPA Rolls Out Streamlined Diesel Engine Fluid Guidelines

How Did We Get Here?

Why Do Many Farmers Hate Using Diesel Exhaust Fluid (DEF)?

Biden to Call on Congress to Suspend Gas and Diesel Tax This Summer

Diesel Prices Smash Another Record — And the U.S. is Now One Hurricane Away from Running Out of Diesel

Just How Tight Are Supplies?

Hurdles in Increasing Production

Still Recovering from Hurricane Ida

Diesel Price Pain to Last for Two Years?

John Phipps: It's Now Less About the Supply of Oil, And More About Refining Capacity in the U.S.

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Why Are Diesel Prices So High?

One Hurricane Away from a Diesel Shortage?

Searching for Solutions

How Long Could the Diesel Price Pain Last?

Diesel Prices Up 78¢ from January 2022

Filling A Tractor Tank Daily Now Costs Some Farmers $1,000, Double What It Did a Year Ago

Read more: Diesel Prices Just Hit a New Record High, Here’s Why a Diesel Shortage May Be Next