Fuel prices are approaching record highs as farmers head into the time of year when they’ll be going through tanks of diesel.
According to a March outlook produced by the United States Energy Information Association, North American consumers this summer will see the highest inflation-adjusted gasoline prices since 1985.
Jason Toews, co-founder of Gasbuddy Organization, a non-profit group that tracks gas prices in Canada and the United States, said there seems to be no end in sight to prices that topped 80 cents per litre at retail outlets last week.
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“This summer I’m expecting to see higher gas prices yet,” he said.
The surge can be blamed on crude oil, which is selling for $36 US a barrel compared to $17 a year and a half ago. Toews said crude oil comprises about 45 percent of the cost of producing a litre of gas.
Gasbuddy does not track diesel prices but Alberta’s Wild Rose Agricultural Producers does. According to the farm group, diesel prices are starting to track up as well, although the increase has not been as dramatic.
Prices in February were up three percent over the previous month, but down nine percent from the same time last year.
“It’s not as quick to jump, but it’s not as quick to come down either,” said Rod Scarlett, executive director of WRAP.
The prospect of higher diesel fuel costs does not appeal to David Rolfe, president of Manitoba’s Keystone Agricultural Producers.
“It’s not something agriculture wants to hear,” he said. “Hopefully there is still time for fuel prices to drop before seeding. If not, it’s another input cost where we’re faced with rising prices.”
Rolfe’s 1,900 acre grain and oilseed farm near Elgin, Man., went through about $13,000 worth of diesel in 2003.
“It’s a substantial input cost, there’s no two ways about it.”
He said farmers may be able to cut out one pass when doing fieldwork, but he suspects they are already doing everything they can to minimize their input costs.
Aside from lobbying governments for more financial aid, the only thing farm groups can do is publish fuel prices to “keep the system honest.”
Toews said one wild card to keep an eye on is the political unrest in Venezuela, the world’s fifth largest oil exporter. A general strike in that country in 2002 caused a spike in fuel prices. Violent antigovernment protests in recent weeks have people wondering if there will be a repeat performance in 2004.
Even without such a disruption to crude oil supplies, farmers will likely be spending more for their diesel this spring and summer.
“I don’t think we’ve seen the last of the high prices,” said Toews.
