YOUR TEXAS AGRICULTURE MINUTE

Diesel market to likely remain tight through 2022

By Gary Joiner
Publisher

The average U.S. on-highway price of diesel was $5.32 per gallon at the end of October. This is 49 cents per gallon below the June 20 peak, but still a $1.59 above the same time last year.

Texas farmers and ranchers have definitely noticed.

A recent Market Intel report by the American Farm Bureau Federation examined the factors pushing the price of diesel higher.

The price of crude oil is the main factor in the price of diesel fuel and gasoline. Fluctuations in the crude oil market greatly influence changes in prices.

But supply and demand forces are also at play, according to the report.

On the supply side, there’s the ban on crude oil and petroleum products from Russia. There’s also been a dip in U.S. refining capacity in the last two years. Diesel production has dropped by about 180,000 barrels per day. That’s equivalent to about 4% of current diesel production.

Stocks of diesel fuel are also down 17% relative to a year ago.

Meanwhile, demand for diesel rises in the fall and winter with increased demand from trucking, farming and heating.

The underlying increase in demand shows no sign of letting up.

The report concludes the diesel market is tight and will likely remain so throughout the end of 2022.

Not the holiday gift Texas farmers and ranchers were hoping for.

The preceding commentary is brought to you by Texas Farm Bureau, the “Voice of Texas Agriculture.” Called “Your Texas Agriculture Minute,” TFB will issue thought-provoking editorials each week—via print and audio—to spark understanding of agriculture in the Lone Star State and its impact on each and every Texan.

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