Diesel Prices Remain High as Farmers Ramp Up Harvest

Smith: Crude oil prices have shown signs of easing, but diesel prices are not following suit, putting even more pressure on the farm economy. Faith Parum, an economist for the American Farm Bureau Federation, said crude oil and diesel prices don't typically follow the same track.

Parum: The biggest reason we haven't seen those prices come down is because we're seeing a structural supply issue in the economy. Meaning, we're just seeing a lower supply across the world. Obviously, Russia has limited refining capacity due to the war in Ukraine. The Middle East has stopped refining capacities due to the war in Iran, and then there is additional troubles in the Red Sea-that's all continuing to bring that supply down worldwide.

Smith: She said the spike occurring during harvest for much of farm country has squeezed margins even further.

Parum: So that diesel price is directly affecting your bottom line. Smaller margins to account for how expensive diesel prices have gotten, and that's on top of already rising production expenses and already rising fertilizer costs, really putting our producers in even further financial pressure.

Smith: She said it's hard to predict when or if the prices will begin to come down.

Parum: You know, if everything calmed down tomorrow, we would see some of those fuel prices come back down. But of course, there's a whole lot that is out of control of farmers and ranchers right now. So, continuing to watch the market, see what happens into the next year. We could see some signs of easing, but again, because this is all a global conflict issue, there's a lot that we just don't know right now.

Smith: Learn more on the Intel page at fb.org. Chad Smith, Washington.