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September 6, 2012
High Fuel Prices Will Hit Farmers and Shoppers
For more information on Newsline, contact: Johnna Miller, Director of Media Development, American Farm Bureau Federation johnnam@fb.org
Need another reason not to like hurricanes? American Farm Bureau Economist Matt Erickson gives you one in this story from AFBF’s Johnna Miller.
| Miller: | Hurricane Isaac rained on just about everyone’s Labor Day weekend by helping to push gasoline prices to a record high for the holiday weekend. |
| Erickson: | The national average was about $3.83 per gallon and diesel was about $4.10 per gallon. So there was some pain at the pump experienced over Labor Day. |
| Miller: | American Farm Bureau Economist Matt Erickson says even though refineries only shut down temporarily during the hurricane, he expects higher prices to stick around. |
| Erickson: | I think here in the short term you may see prices go down, but looking forward here I think you will see gas prices stay relatively high for the rest of 2012. You have to look at crude oil. If we continue seeing crude oil at $90 to $100 a barrel you know you’re going to see high gasoline prices. |
| Miller: | Higher fuel prices mean it not only costs more to harvest crops, but also to process and package the food and transport it to processors and stores. |
| Erickson: | Going into harvest season, farm diesel right now is at about $3.70 per gallon. In order to fill up a 277 gallon tank combine, it would cost a farmer about $1,025 to fill that combine. That’s 6 percent higher than the 2011 average and 37 percent higher than the 2010 average. |
| Miller: | Johnna Miller, Washington. |
| Miller: | We have two extra actualities with AFBF Economist Matt Erickson. In the first extra actuality he says fertilizer prices will be up, too. The cut runs 27seconds, in 3-2-1. |
| Erickson: | Because of the short crop this year, we’re going to be expecting to see more farmers plant more corn acreage into next year and, if history serves as any lesson, fertilizer prices are really tracking the price of corn. It’s a demand issue. So if you have more farmers growing corn, it takes a lot of energy to put that corn crop into the ground and fertilizer is a big input cost for farmers to actually purchase and plant that corn. So fertilizer prices are expected to be increasing for the rest of 2012 and into 2013. |
| Miller: | In the second extra actuality Erickson says most of the country paid more for gas over Labor Day weekend. The cut runs 18 seconds, in 3-2-1. |
| Erickson: | I think you will see gasoline prices decrease a little bit for consumers, but still think you’re going to have high prices for the rest of 2012. And just to give you an indication of the Labor Day prices, 45 out of the 50 states experienced higher gas prices this year than they did at this time last year, so the majority of the states are experiencing the pain at the pump. |
| Miller: | Newsline is updated Mondays and Thursdays by 5pm Eastern time. Thank you for listening. |