Many prairie farmers have been adding extra storage capacity to their operations as they head into seeding season
Fuel tanks have been driving up sales at suppliers across Western Canada.
“I have noticed that guys are going crazy buying fuel tanks. Diesel fuel is lower than it has been in 10 years for sure. So guys are jumping on the bandwagon,” said Kevin Serfas, who grain farms northeast of Lethbridge.
He said Twitter has been abuzz with chatter of new and used tanks to buy and sell.
“I’ve never seen talk about storage tanks like it is right now,” said Serfas, who is also vice-chair of the Alberta Canola Producers Commission.
Fueled by a huge drop in diesel and gasoline prices, many farmers have been adding extra storage capacity to their operations as they head into seeding.
The price of West Texas Intermediate crude oil started the year at US$63 a barrel and has been precipitously falling since then, currently hovering around $26 a barrel.
With their tax emptions included, average producer prices for diesel is currently selling at about 65 cents per litre, while gasoline is about 50 cents.
Tank sales have tripled for United Farmers of Alberta (UFA) for this time of year, said Don Smith, vice-president of petroleum and innovation.
“People are trying to take advantage of that low-price environment. They’re getting ahead of their requirements going into the spring planting season and if they have storage, they’re buying what they can and filling it up,” he said.
If world oil prices rebound and fuel costs go up, farmers will be able to use their cheaper fuel in storage.
He said Meridian and West Steel are the two main manufacturers they sell at their Farm and Ranch supply stores, as well as petroleum locations in Western Canada.
Double walled tanks range from 500 litres all the way to 65,000 litres.
While it’s difficult to narrow down their hottest seller, Smith said farmers are generally buying more tanks in the 5,000 to 10,000 litre size.
“Average is a very difficult thing to say when it comes to farming because of people with different size of farms and different types of operations that they need to service,” he said.
At Federated Co-op Limited, demand for new and used fuel tanks has also significantly increased.
“There’s certainly been a spike in demand. We’ve had lots of requests, lots of growers coming in and purchasing fuel tanks of all sizes primarily due to low fuel prices,” said Trish Meyers, director of crop supplies at FCL.
She said producers are taking advantage of buying low and stretching their dollar while upgrading their present fuel storage capacity.
“Farmers are recognizing there’s an opportunity to capitalize on low fuel prices and fill some tanks. It’s also interesting that growers have, if they’ve been thinking for a few years of upgrading their tanks, maybe they need more, they need newer, they need bigger tanks. This for them is the perfect opportunity to make that decision,” she said.
According to Twitter posts, there are many used, refurbished tanks for sale that have originated from the oil patch.
There are also some questionable items available, said Andy Kirschenman, who farms near Hilda, Alta.
“Some guys are pedaling tanks that maybe are not good for fuel. There was one post about some fibreglass tanks that, depending on the resin that they use, they’re only good for water. They’re not good for fuel or fertilizer, so you’ve got to really watch what you’re buying even after you’ve got your cheap fuel spoken for,” he said.
Smith and Meyers also caution producers to know what they’re buying and the environmental regulations surrounding fuel tanks.
“My recommendation would always be to use the type of vessel that is designed for what you’re going to use it for. People will put volume into whatever they can find at times,” said Smith.
Kirschenman, who uses a refurbished oil patch tank, is hedging that prices will remain lower for the foreseeable future and will not be adding fuel capacity to his operation.
“I don’t think fuel prices are going to jump because there are a couple of things weighing on them between the price of oil from the Saudis and Russians, as well as this (COVID-19) virus thing. So I think we’re going to get through seeding and then be able to fill,” he said.
He also points out that the storage life of fuel is important to consider.
“We might have guys that find out that by the time they start using it that maybe this wasn’t a great idea,” he said.
Kirschenman said his mechanic’s rule of thumb is three to six months for diesel fuel, but it might be pushed to a year under certain conditions.
Smith said there are several factors to consider surrounding diesel storage.
“There could be a number of things that go wrong with diesel as it ages. It depends on how good your storage system is, how well you take care of it and the type of conditions that it’s under. But really, you’re going to get some level of degradation in terms of the quality of it. Is it going to go instantly bad? It’s not like milk, so you don’t have to worry about that, but you’re not going to get the performance out of it that you would if it’s seven, eight, nine months old,” he said.
Added Kirschenman: “Know how long your fuel is going to last. Know if your tank is going to last. That’s a lot of fuel to have poured out on the ground if you’ve made a mistake.”