Diesel prices are climbing just as harvest — the most fuel-intensive time of the farm year — gets under way across the United States. The national average on-highway diesel price reached $6.285 a gallon on 14 September, up from $5.97 a week earlier and more than $2.50 above the same week last year, a rise of nearly 70%, according to American Farm Bureau Federation economist Faith Parum. Farm diesel, exempt from the 24.4-cent federal highway tax, has climbed just as sharply: $5.45 a gallon on 4 September against $3.02 a year earlier, about 80% higher.

The causes lie in global energy markets, Parum writes: the closure of the Strait of Hormuz has cut a major oil shipping route, Houthi attacks on infrastructure in the Bab al-Mandab Strait continue, and refining capacity in Russia is limited by the war. Crude has risen about 14% since the start of September — October West Texas Intermediate closed at $102.56 a barrel on 16 September, from $90.22 on 1 September and near $70 in early summer — but diesel also reflects refinery capacity, inventories and demand, and can rise faster than crude and stay high when crude retreats.

US inventories offer little cushion. Distillate stocks, which include diesel and heating oil, fell from about 127.2 million barrels in January to 109.4 million in June, a drop of nearly 18 million barrels or 14%, and are low against a decade in which they regularly exceeded 140 million. Meanwhile US refiners serve a global market: the country exported about 456 million barrels of distillate in 2025 (473 million in 2024) and imported only about 58 million, with Mexico taking about 17% of exports, followed by Chile, Brazil, the Netherlands and the United Kingdom — so higher world prices pull on American fuel while domestic stocks are already thin.

The shock lands on thin margins. USDA forecasts farm fuel and oil expenses at about $22 billion in 2026, up nearly 29% or almost $5 billion on 2025, and despite the grain rally farmers are expected to operate below breakeven again, possibly into the 2027 crop year if the disruptions persist. Tractors, combines and irrigation pumps run on diesel, and so does the transport that moves crops from field to elevator, processor and port.

"Until crude prices ease, global fuel supplies improve or US inventories rebuild, diesel is likely to remain a significant source of cost uncertainty for farmers heading through harvest and into the 2027 production year," Parum concludes.

Source: American Farm Bureau Federation