Rising fuel prices and global tensions impact US farms
The U.S. economy continued steady growth in early 2026, supported by strong consumer spending, a stable unemployment rate, and investments in artificial intelligence. However, rising fuel prices and global tensions are creating uncertainty for the rest of the year. This according to a new report from CoBank’s Knowledge Exchange.
Energy costs are increasing due to instability in global oil markets. Even though the U.S. produces large amounts of oil, domestic fuel prices are still affected by international supply disruptions. This is especially true when conflicts impact major oil-producing regions.
Rural communities are more affected by rising fuel costs than urban areas. People in these regions travel longer distances and depend heavily on diesel for farming, transport, and construction. Higher fuel prices also increase the cost of delivering goods, making everyday items more expensive.
“Higher diesel prices also raise the cost of moving food and goods into rural areas, pushing up local prices and amplifying the economic hit compared with urban areas that have more alternatives and competition,” said Teri Viswanath, lead power, energy and water economist with CoBank.
“More broadly, the effects of the closure of the Strait of Hormuz and the stepped-up attacks on energy infrastructure in the Persian Gulf could be long-lasting and have probably not been fully priced into U.S. consumer markets,” said Viswanath.
The overall economy is showing signs of slowing growth. Job opportunities are declining, and wage growth remains weak. Rising energy costs are expected to increase inflation, forcing many households to reduce spending, especially on non-essential items.
In agriculture, grain prices have increased due to market volatility. Farmers are shifting toward soybean production because of better returns, while corn and wheat acreage is declining. However, higher input costs like fuel and fertilizer are reducing profit margins.
The livestock and dairy sectors show mixed trends. Strong demand for meat is supporting prices, but cattle supplies remain tight. Dairy markets may see increased price fluctuations due to changing supply patterns.
Government action is also important. Lawmakers are working to pass a new farm bill to support farmers and rural communities. These programs aim to address current economic challenges.
Overall, the U.S. economy remains stable, but rising energy costs and global risks could slow growth and impact agriculture throughout the year.
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