The national average diesel price has exceeded $6 per gallon for the first time, creating an immediate cost problem for farmers entering the heart of harvest. GasBuddy reported Thursday that diesel reached the record as global petroleum supplies tightened because of Middle East disruptions, Ukrainian attacks on Russian refineries and fuel-export restrictions from Russia and China. U.S. diesel inventories are about 13% below their five-year average, according to Reuters. Refining margins for diesel have also reached record levels. The timing could hardly be worse for agriculture. Combines, tractors, grain trucks and irrigation systems consume enormous quantities of diesel during harvest, meaning the increase could significantly raise production and transportation costs. Higher petroleum prices could benefit ethanol and renewable diesel by improving their economics relative to fossil fuels, but the immediate impact for most farmers is sharply higher operating expenses.
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