Crude oil above $100 and diesel over $6 per gallon are raising farm input costs and adding pressure across the rural economy.
How $100 Oil and Rising Diesel Prices Are Squeezing Farmers
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Crude oil has climbed above $100 per barrel and diesel is over $6 per gallon, adding pressure to already tight farm budgets. Creighton University economist Ernie Goss explains how higher energy costs are affecting equipment sales, agricultural exports and rural Main Street—and why ethanol is one of the few sectors benefiting.
Transcript
This week, crude oil prices shot past the $100 mark as traders grew concerned that the war between the United States, Israel and Iran has escalated. The price of crude oil has risen over 30% across the last dozen trading days.
The resulting spike in fuel prices has pushed retail gasoline to an average of $4.22 nationally, while diesel is rapidly approaching $6 per gallon, a 58% rise since the start of the war.
The increased input costs are pinching farmer’s budgets.
Ernie Goss, Creighton University: “The rural Main Street economy that is really being hurt by the, the farmer's ability, for example, to buy equipment. Farm equipment sales are down. We've recorded it for 36 straight months, Peter, for agricultural equipment sales are down and that's why I don't see any real turnaround anytime soon.”
The jump in energy prices is also pushing up inflation for global consumers, which, along with reciprocal tariffs, is affecting the volumes of U.S. exports.
Ernie Goss, Creighton University: “I mean, we produce far too much manufactured goods, agricultural goods for the domestic economy. We have to sell abroad. And so when you start talking about energy, you're talking about the global economy. And that's what we're seeing, $100 a barrel WTI West Texas Intermediate. That's way outside the boundary of what it would be without the interruption of the war with Iran. And it really has an outsized impact on agriculture and manufacturing.”
Renewable fuels are in a sector that benefits from higher crude prices. Ethanol becomes a profit center when oil is expensive.
Ernie Goss, Creighton University: “Well, when the price of oil and gasoline gets higher that supports ethanol, ethanol, you can increase the price of ethanol. So there are some good factors that come out of that good impacts, I should say, coming out of that, but it's far outweighed by the losses in terms of the grain, the higher grain prices for beef producers, higher grain prices for the hog, the pork producers, all that.”
For Market to Market, I’m Peter Tubbs
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