Diesel Prices Forecast to Remain Elevated Through 2027

Kansas State agricultural economist Gregg Ibendahl predicts diesel prices will remain high through 2027 due to global market conditions. Ibendahl, a farm management specialist with KSU's Extension Service, attributes the elevated costs to soaring crude prices, limited refining capacity, and supply system interruptions.

The war in Ukraine and Iran has further disrupted shipping in the Gulf region and Strait of Hormuz, causing diesel exports by Russia to weaken. To address pump prices, global tensions must be resolved and international fuel flows normalized.

Ibendahl notes that even with a best-case scenario, where the conflict subsides quickly and shipments normalize, it could take six months for the market to adjust. Prices may not return to pre-2026 levels until two years later, he warns.

The cost of diesel in Kansas has risen by $2.25 per gallon this year alone, with the national average reaching $6.51 a gallon. Ibendahl attributes about 70 cents of the increase to crude oil costs, citing the price jump from mid-$70s to over $100 a barrel.

The bulk of the cost escalation stems from supply disruptions at refineries and transit issues. Russia's inability to refine its own oil due to damaged facilities has resulted in suspended diesel exports to Europe, exacerbating the global shortage.