Diesel Prices Soar as Global Supplies Hit 40-Year Lows Ahead of Harvest Season

Diesel prices have surged to near-record highs as farmers prepare for fall harvest. The national average retail price of diesel hit $5.61 per gallon on August 28, up nearly $2 from last year and close to the all-time high of $5.82 set in June 2022.

The spike comes as diesel inventories have dropped to their lowest levels since 1982, creating a perfect storm of supply constraints and geopolitical tensions. Distillate fuel oil stocks, which include diesel and heating oil, are at only 103.4 million barrels for the week ending August 21, a record low for this time of year.

The situation has worsened in recent weeks as Ukraine's attacks on Russian oil refineries have disrupted global diesel supplies. Russia is one of the largest producers of diesel to the global market, and now they've banned exports of diesel. This has pushed the global market for diesel into extremely tight territory.

Farmers face potentially thousands of dollars in added costs as diesel prices continue to climb. The price surge couldn't come at a worse time for agriculture, with harvest season just around the corner. Patrick De Haan, executive director of GasBuddy, warns that diesel prices could climb even higher, possibly reaching $6 per gallon across the country.

The diesel crisis extends beyond the farm gate, with higher costs likely to ripple through the entire economy. Higher diesel costs will likely reignite inflation in the months ahead, and fertilizer prices may also face upward pressure from the diesel shortage.