Record diesel prices hit North Dakota farmers at the wrong time

Farmers hoping the cost of diesel fuel would go down before fall harvest hits high gear are instead facing the highest prices ever seen. 

Diesel is topping $6 per gallon in North Dakota as wars in the Middle East and Russia drive up prices. 

Chris McDonald of Leonard in southeast North Dakota said he expects to start harvesting soybeans next week and corn in a month, but diesel costs about are double what he paid last fall. 

“That can erase your profit,” he said Tuesday at the Big Iron farm show in West Fargo. 

McDonald, president of the North Dakota Soybean Growers Association, said ideally farmers have a contracted price in place for diesel fuel before the high-demand times of planting and harvest, but many farmers were waiting for prices to go down over the summer after a spring spike tied to the U.S. war with Iran. 

“I think a lot of people expected that maybe the war would wrap up, and the prices would go down some, and they never really did drop very much,” McDonald said. “Then it just skyrocketed.”

Diesel prices reached a record high of $6.31 per gallon in the United States, and gas was at an average of nearly $4.37 a gallon Wednesday, according to AAA.  

Allison Thompson is a market analyst with The Money Farm in Ada, Minnesota. During a panel discussion at the farm show, she called the fuel market “a headline-driven trade.” 

The recent headlines have included the war with Iran heating up again. The war that began in late February has limited oil shipping through the Strait of Hormuz and Persian Gulf. 

Dave Ripplinger, a bio energy economist and associate professor with North Dakota State University, said in an interview that an attack on a Saudi Arabian pipeline was what really jolted the energy markets this week. 

“To me, the thing that’s impacted more barrels this week is the pipeline,” Ripplinger said. 

Bryan Dean said he filled up the fuel tanks on his farm at Velva in north-central North Dakota as soon as the war broke out. But after spring planting, fertilizing, applying herbicides and pesticides, and harvesting early crops such as wheat, those tanks are empty. 

He said about 70% of his land is planted with soybeans and corn, and harvest is around the corner. He will be buying diesel only as needed until at least the November election. 

The Russia-Ukraine war also is back in the headlines with attacks on energy facilities. Russia on Wednesday announced it would continue to ban diesel exports. 

Ripplinger said the uncharted price territory will be hard for farmers to navigate. 

“We’re kind of outside the norm where you don’t know exactly how high they’re going to go,” he said. 

Some of North Dakota’s soybeans go to a refinery near Dickinson for use in renewable diesel. McDonald says he uses diesel with a 5% renewable blend, but the price is basically at par with traditional diesel. That differs from gasoline blended with corn-based ethanol, which sells for a discount at the pump. 

Tractors, combines and semitrucks use diesel instead of gasoline because it provides more power at low speeds and when pulling heavy loads. 

On his drive from Velva to West Fargo for Big Iron this week, he said he saw diesel as high as $6.53 per gallon.

Dean, a member of the North Dakota Corn Growers Association board, said diesel used to be cheaper than gasoline, too. 

“A few years back, it switched over and went higher,” Dean said. “So I quit buying diesel engine pickups, went back to gas. Plus, the ethanol helps.” 

Reach North Dakota Monitor deputy editor Jeff Beach at [email protected].