July 13, 2022
www.gfb.org
Vol. 4 No. 15
AFBF: RISING FUEL COSTS CONTINUE TO IMPACT FARMERS Like all Americans, farmers and ranchers are facing higher prices at the fuel pump, as well as on the farm. Growers felt these price increases throughout the spring as they worked to plant during one of the most important crop years in recent history, according to the American Farm Bureau Federation’s June 28 Market Intel. Growers have expressed concerns about the availability and delivery of diesel fuel when they need it most, especially as they have faced delayed planting in many areas. The window to plant crops this year was smaller than usual, so fuel delivery needed to be timely, but it also was very expensive. Gasoline prices hit a new high, rising above $5.01 in June, according to the U.S. Energy Information Administration. Diesel prices rose to $5.72 per gallon in June, up $2.43 per gallon, or 74%, compared to $3.29 per gallon in June 2021. The current high price of diesel is more than two times the price paid before 2020. Looking back to the end of February, when Russia invaded Ukraine, the price of diesel jumped by $1.15 per gallon within the two weeks following. The U.S. Energy Information Administration breaks down the costs within a gallon of fuel. As of April 2022, the most recent data available, 60% of the cost of regular gasoline is crude oil, 17% is the cost to refine, 11% is costs associated with distribution and marketing, and 12% is taxes, which vary based on the state in which you are pumping gasoline. In April, the cost of diesel, the primary fuel option for farmers and ranchers, was made up of four parts – 49% is based on crude oil, 28% is refining, 12% is costs associated with distribution and marketing and 11% is taxes, which varies by state. The U.S. supply of weekly crude oil stocks, similar to ending stocks of corn or soybeans, is at its lowest point since 2004. While the U.S. is relatively behind its normal domestic production of crude oil and limited imports are causing supplies to be short, demand is rising, both domestically and globally. As noted, mid-March through the end of September is the peak demand time for gas and diesel, so it is normal for inventories to lower during this time. What makes the situation difficult this year is that the U.S. does not have the same quantity of additional supplies, like imports, to supplement the increased demand. The East Coast will continue to see fewer imports. In addition, East Coast ports are likely to have an increase in exports as the U.S. supplements demand from European and Latin American -continued on next page