Diesel Near $6.40 a Gallon Squeezes Farmers, Truckers and School Districts

Diesel, the fuel that moves the country’s freight and runs its farm machinery, is costing Americans far more than it did a year ago, and the pain is arriving just as the Midwest harvest gets underway.

The national average retail price of on-highway diesel was about $6.38 a gallon in the week of Sept. 28, according to the Energy Information Administration, after peaking near $6.53 the week before. A year earlier the average was about $3.75. Regular gasoline averaged about $4.47 in the same week, leaving diesel nearly $2 a gallon more expensive.

Supply is the main problem. Refining capacity and crude production have been squeezed by the wars involving Iran and Ukraine, while demand from trucks, trains, generators and home heating has not let up, NPR reported. The Guardian, reporting from the eastern corn belt in an account the paper could not independently confirm, pointed to regional troubles as well, including a power outage and flooding that knocked an ExxonMobil refinery in Joliet, Illinois, offline last month. Four of the five states with the steepest weekly diesel increases in September were in the Midwest, where prices were up more than $3 a gallon from a year earlier, the Guardian reported.

Farmers are among the most exposed. The Guardian reported that an estimated 20 billion bushels of corn and soybeans must be brought in by the end of November, and cited one industry estimate that put the added fuel cost at about $12,500 for every 1,000 acres harvested. One Indiana grower told the paper he expects to burn about 9,000 gallons during harvest, on top of higher prices for seed, chemicals and equipment.

The effects reach well beyond farms. Trucking firms and retailers stocking up for the holiday season face higher shipping bills, and school districts that run diesel buses are consolidating routes and cutting field trips. A national survey published in May found that almost 40 percent of participating districts were combining bus routes to save fuel, the Guardian reported.

Policymakers are weighing options. Republican members of Congress have urged President Trump to ban diesel exports to hold down domestic prices, and the administration is reported to be considering the idea, according to NPR, though the American Petroleum Institute strongly opposes it. Industry groups argue that export limits could disrupt global markets, discourage refining investment and ultimately raise costs. Releases from the Strategic Petroleum Reserve have helped steady prices, but the reserve has been drawn down to its lowest level in decades, according to the Guardian, which leaves less of a cushion heading into winter, when demand for heating oil climbs.

Diesel has generally cost more than regular gasoline since 2004 because of global demand, stricter sulfur rules adopted in 2006 and a higher federal excise tax, NPR noted. This year’s gap, though, is unusually wide, and it is landing on the industries least able to absorb it.