By Pat Melgares
Diesel fuel prices are likely to remain high for at least the next year, squeezing farmers' profit margins and eventually hitting consumers in the pocketbook, according to a Kansas State University agricultural economist.
Diesel is currently about $2.25 per gallon higher than it was earlier this year, said Gregg Ibendahl, a farm management specialist with K-State Extension. Ibendahl monitors European natural gas prices as a driver for fertilizer prices and tracks global oil prices to estimate market shifts. He publishes regular updates on AgManager, a website maintained by K-State's Department of Agricultural Economics.
Ibendahl says that while part of the increase in diesel prices can be traced to higher crude oil prices, the larger driver is a global shortage of diesel fuel.
"The price of oil has gone from the low to mid-$70s to more than $100 a barrel, and that probably explains about 70 cents of the increase per gallon," Ibendahl said. "But diesel is up more than that. The rest is really because there just isn't enough diesel fuel in the world right now."
Source : k-state.edu