As the summer driving season approaches, drivers are already paying more for gasoline due to the oil price rally in recent months.
But higher oil prices affect not only the gasoline bills of retail consumers. The higher price of oil is also pushing up diesel fuel prices as the harvesting and planting seasons for various crops are already in full swing.
Farmers in the United States and around the world see their diesel fuel expenses jumping and eating into their profits that have been already constrained by depressed prices of some crops.
Ultra-low sulfur diesel is used for farming equipment and for transportation of crops, and the May price of that diesel is the highest it’s been since 2014, just before the collapse of crude oil prices.
“You just kind of all of a sudden realize, ‘Wow, it’s pretty high,’” farmer Glenn Brunkow from Wamego, Kansas, tells Reuters.
For next year, Brunkow is considering locking in diesel prices for the first time ever to save on future rises in diesel fuel prices.
This year, farmers are struggling with higher fuel costs as a result of the advance in crude oil prices in recent months.
In the U.S., where America’s farms output contributed US$136.7 billion—or about 1 percent of GDP—to the economy in 2016, total production expenses this year are expected to be flat on 2017, but spending on fuel and oils is expected to jump 10.2 percent, forecasts by the United States Department of Agriculture (USDA) show.
Spending on fuels and oils, which accounts for nearly 5 percent of cash expenses, is expected to increase by 10.2 percent, or by US$1.4 billion, on top of a 13.9-percent, or US$1.7 billion, increase for 2017.
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