(The Center Square) – It’s around harvest time for wheat and corn and other crops in Pennsylvania, but as farmers head out in combines to do the work they’re experiencing a nasty price shock.
The cost of diesel fuel hit a record high of nearly $6.61 a gallon this week. Hence, the big piece of farm equipment that last year cost $70 to $80 an hour to run this year costs about $180 to $200 an hour. Those figures, shared by Pennsylvania Farm Bureau President Tommy Nagle, illustrate the severe impact the current diesel fuel price runup is having on agriculture.
It’s one of the biggest segments of the state economy.
“There is a lot of uncertainty,” said Nagle, who runs a crop and beef operation in Cambria County. “We are going to have a lot of family farmers who are going to face some tough decisions in the near future on their viability and whether they are going to remain in business.”
On Friday, the average price for a gallon of diesel fuel in Pennsylvania was $6.6021, or a fraction of a penny less than the record of $6.6098 set earlier in the week, according to AAA. That’s 60% higher than the price of about $3.98 a year earlier.
Meanwhile, the average price for a gallon of unleaded gasoline in the state was $4.55, an increase of about 38 percent from $3.29 a year earlier.
Swings in the price of diesel fuel ripple through the economy far beyond agriculture.
Diesel consumption in transportation nationwide was about 123 million gallons a day last year, according to the U.S. Energy Information Administration. Diesel engines in trucks, trains, and boats help convey most products people consume, according to the federal agency.
Some small trucking companies in Pennsylvania already have gone out of business during the latest price surge, according to Pennsylvania Motor Truck Association President and CEO Rebecca Oyler.
“Margins are really tight,” Oyler said.
The problem isn’t just fuel prices, she said. There also is a domino effect on trucking companies in that the high price of gasoline causes consumers to spend less, meaning demand for hauling consumer goods also slackens.
While the trucking industry is structured to allow it to handle sustained price surges, Oyler said it is certain the diesel prices will affect consumers.
“Diesel really is the heartbeat fuel for American economic activity,” she said.
The record prices also are pressuring transit agencies, according to Kim Whetsell, executive director of the Pennsylvania Public Transportation Association.
“Many fixed-route systems have invested in CNG, and some shared ride providers are using alternatives like propane, but gasoline and diesel costs still have a significant impact,” Whetsell said. “Transit agencies also can’t simply raise fares overnight, so when fuel prices climb quickly, agencies have to absorb those higher costs within already tight operating budgets.”
