Midwest Diesel Prices Surge as Harvest Season Begins

Midwestern farmers are confronting record diesel expenses as the soybean and corn harvest ramps up. Joe Hamilton, who farms 2,500 acres in Indiana’s Delaware County, faces a bill for roughly 9,000 gallons of diesel for the upcoming harvest. He estimates his operation uses about 300 gallons per day over 30 harvest days. Estimates suggest that 20 billion bushels of soybeans and corn (? 522 million metric tons) will be harvested in the region through the end of November, and the surge in diesel prices adds an estimated $12,500 in fuel costs for every 1,000 acres harvested.

The Guardian

Multiple factors are pushing diesel prices higher than a year ago. Internationally, the war with Iran and damage to Russian refineries have constrained global supply. Regionally, a power outage and flooding at an ExxonMobil refinery in Joliet, Illinois, shut down more than 80 million gallons of diesel and gasoline for over a week. A six-month labor dispute at BP’s Whiting, Indiana refinery has also limited regional output. The Midwest’s relatively low number of refineries limits its ability to offset such disruptions, a point highlighted by a local expert.

The Guardian

Higher diesel costs are rippling beyond farms. In Ohio, the Columbus school district operates 15,000 diesel-powered buses serving about 800,000 students daily. District officials note a transportation budget of over $70 million per year and warn that diesel price hikes could force further route consolidations. A national survey released in May found that nearly 40 % of school districts are consolidating bus routes, while 20 % have cut non-required trips such as field trips. Hamilton is turning to conservation practices, using no-till and cover crops that reduce fuel use to two-four gallons per acre, but limited on-farm fuel storage forces him to purchase additional diesel at current elevated prices. He reports diesel is $3 more expensive than a year ago, while soybean prices have risen to $12.88 per bushel (up from $10.14) and corn to $5.23 per bushel (up from $4.22).

The Guardian

University lecturer Kurt Lykins warns that the Strategic Petroleum Reserve—holding 714 million barrels—has been drawn down by 172 million barrels, providing temporary price stability. Michael S. Brown of the Columbus school district says the district is contracted through 2027 and is not making major changes now, but acknowledges ongoing budget pressures. Analysts note that even if supply normalizes, rebuilding the Reserve will slow any price decline for consumers.

The Guardian

• “The midwest is different form the coasts or even the Gulf, primarily in the [lower] number of oil refineries and how it can respond in times of crisis. If you have water access you can bring tankers in with additional oil,” — Kurt Lykins, a lecturer at Otterbein University

The Guardian

• “I believe we are contracted through 2027, so no major changes [are being put in place] at this time,” — Michael

The Guardian

• “Let’s say everything goes back to normal – we still need to build up the [Strategic Oil] Reserve and that’s going to slow the drop in prices for consumers,” — Kurt Lykins, a lecturer at Otterbein University

The Guardian