Diesel Prices May Remain High for Years Amid Global Supply Disruptions

Kansas State University agricultural economist Gregg Ibendahl warns that diesel fuel prices could remain high for at least another year. The current price of around $2.25 per gallon higher than earlier this year is a result of global supply disruptions, including Russia's reduced exports due to refinery damage from drone attacks during its war with Ukraine.

Ibendahl explains that while the increase in diesel prices can be attributed partly to higher crude oil prices, which have risen to over $100 per barrel, the main driver is a shortage of diesel fuel. He estimates that global supplies have tightened sharply due to geopolitical disruptions and strong overseas demand drawing U.S. supplies offshore.

Farmers are particularly affected by high diesel prices, as they often cannot pass on these costs directly to consumers. Ibendahl notes that farmers absorb higher diesel costs in grain production, which can be significant, around $20,000 for a 2,000-acre operation. This added expense can make the difference between a profitable year and not making any money at all.