Joe Hamilton farms corn and soybeans on 2,500 acres in Indiana\u2019s Delaware county. Next week, when his soybean harvest kicks off, four tractors, two combine harvesters and five semi-trucks will roar to life.<\/p>\n
And with that, a record bill for about 9,000 gallons of diesel awaits him.<\/p>\n
\u201cDuring harvest, we use about 300 gallons of diesel fuel per day, and we have around 30 harvest days in a typical fall,\u201d he says.<\/p>\n
With diesel-guzzling combine machines now entering fields across the eastern corn belt for the beginning of the soybean harvest, crop growers, trucking companies and a host of other industries that rely on the fuel are dealing with record-high prices.<\/p>\n
An estimated 20bn bushels of soybeans and corn (522m metric tons) are set to be harvested in the midwest between now and the end of November. Estimates suggest<\/a> that the war with Iran, damaged refineries in Russia and regional diesel supply disruptions could add an additional $12,500 in fuel costs for every 1,000 acres of crops harvested.<\/p>\n \u201cFarmers are price takers. It\u2019s not just fuel \u2013 it\u2019s chemicals, it\u2019s seed, it\u2019s the cost of equipment,\u201d laments Hamilton.<\/p>\n \u201cEverything has increased along with the commodity prices.\u201d<\/p>\n As well as farmers, manufacturers, trucking companies and store owners in the midst of ramping up orders for the holiday buying season are facing the fallout of higher diesel costs.<\/p>\n Four of the five states with the highest weekly diesel price<\/a> increases in the country in September were in the midwest (Illinois, Michigan, Ohio and Indiana), with the fuel jumping by more than $3 per gallon compared with a year ago.<\/p>\n On top of the war on Iran, regional issues are playing a role.<\/p>\n A power outage and flooding last month at an ExxonMobil refinery in Joliet, Illinois, saw it shut down for more than a week, taking more than 80m gallons of diesel and gas offline. An ongoing six-month dispute between union members and BP at one of the largest refineries in the country in Whiting, Indiana, has also fueled a surge in prices regionally.<\/p>\n \u201cThe midwest is different form the coasts or even the Gulf, primarily in the [lower] number of oil refineries and how it can respond in times of crisis. If you have water access you can bring tankers in with additional oil,\u201d says Kurt Lykins, a lecturer at Otterbein University.<\/p>\n \u201cSo, it\u2019s hard for the midwest to respond.\u201d<\/p>\n Lykins adds that he\u2019s concerned about the Strategic Oil Reserve \u2013 the 714m-barrel-capacity reserve held in salt caverns in Texas and Louisiana that today is lower<\/a> than at any time in the past 43 years.<\/p>\n \u201cWe\u2019ve drawn down 172m barrels. Although the prices for gasoline and diesel have been rising, drawing down from the reserve has given some stability to prices,\u201d he says.<\/p>\n But that could soon change, he notes.<\/p>\n \u201cThe issue is when we are no longer able to do that, the stability will no longer be there. We\u2019re getting ready to go into a high diesel demand season in winter.\u201d<\/p>\n Amid the rising prices, large consumers of diesel fuel across the region are moving to reduce expenses where they can.<\/p>\n In Ohio<\/a>, 15,000 school buses that overwhelmingly run on diesel are charged with getting about 800,000 grade school students to and from their homes every school day.<\/p>\n The Columbus school district, already facing a potential $157m financial deficit<\/a> by 2031, has recently had to cut nearly 300 jobs, close four schools and limit bussing for students.<\/p>\n The diesel issue, say administrators at the largest public school system in the state, is front of mind.<\/p>\n \u201cI believe we are contracted through 2027, so no major changes [are being put in place] at this time,\u201d says Michael S Brown of the Columbus school district.<\/p>\n \u201cThat said, we are constantly looking at bussing as a budget issue, at more than $70m total cost per year. I expect there will be transportation changes to the system in the next budget.\u201d<\/p>\n