When it comes to the farm, some things are as old as the farm, and one of those things is diesel fuel.

Yes, I am old enough to remember pouring gas into both a combine and a tractor at the end or the start of the day. Diesel fuel was relatively new but over time became as regular to the farm as any nut or bolt. It was simply a cost of doing business, but at the same time we were always trying to maximize our fuel efficiency. Time has gone by, and as it has, our tractors and combines now use computers and software to utilize that fuel efficiently.

Diesel fuel is now extremely expensive. In fact, it is at record levels. The cost of diesel fuel in the U.S. for on-the-highway use broke through $6.40 a U.S. gallon today. U.S. farm prices are a bit less but up about $3 from a year earlier. In Ontario, I'm paying about $2.52 a liter or $11.52 a Canadian gallon. That's with the HST included. Needless to say, it's got my attention. For something that once seemed mundane on the farm, it's almost like we're measuring it with a teacup now.

I don't have to tell any of you that it's a problem, especially with harvest ramping up in eastern Canada and well underway in Western Canada. The rise in prices has been somewhat incremental, but on my farm it's up 26% from April, and it was even elevated at that time. For instance, in April, I was paying $1.95 per liter; that changed to about $2.14 a liter this summer, and now we're at $2.52 a liter. Let's just say that it makes recreational tillage a lot more of a luxury item.

Reasons for this price increase in diesel fuel are many. However, much of it starts from the war in Iran. It is no secret that when the war started and the Strait of Hormuz was closed, the global economy was riveted with different effects. Of course, one of those is the oil market, which has been frenetic since the missiles started flying. On top of that, we have another Strait (Bab al-Mandab) between Djibouti and Yemen, compromised by Houthi rebels fighting along the Red Sea with Saudi Arabia and Yemen. Both of these straits are choke points for much of the world's oil to get through. It's a long story and one we told quite frequently early in the spring when it came to fertilizer availability and price.

Saudi Arabia had built a pipeline going from the east to the west to the Red Sea, but that is also being compromised by drone attacks. Keep in mind what I've always said: truth is the first casualty of war, so it's hard to tell what's really going on. Whatever is going on is escalating, and that is making farm inputs like diesel fuel and fertilizer more open to extreme price volatility. Everybody, of course, wants it to go back to normal, but I think normal left the building earlier this year.

I like to think of the cash price of diesel fuel like I think about the cash price of grain. For instance, the price of corn is determined by the nearby futures price plus or minus a local basis determined by supply and demand. There is a lot more to it than that, but that's basically it. Diesel fuel, on the other hand, reflects not only the price of oil but also how much refineries are producing. Your diesel fuel is determined by the supply and demand for distillate fuel. Much will depend on how efficient the refineries are and what else is going on in the market. Suppliers depend on rack prices for diesel fuel, which are usually terminal-specific at particular locations. When it arrives on my farm, there would be a certain basis over that rack price. That's what we pay.

You can check out Petro-Canada rack fuel prices through the following link: https://www.petro-canada.ca/…

Of course, there has been massive disruption in this, and I just happen to be at the end of the line. It has led to some real challenges for Canadian agriculture in 2026. In fact, that goes without saying, but at the same time, as farmers, we have choices to make. I used to work the ground three times in a cloud of dust before I planted my crops. However, for 30 years now I've no-tilled much of my crop, resulting in a tremendous reduction in my fuel use. These latest price increases will certainly be challenging some of those management decisions Canada-wide if it continues.

Would I like somebody to do something about this? I sure would, but I don't know where to start. There are even some who say the Ukrainian bombing of Russian energy depots is further depleting global diesel supplies. I've always been on the side of peace; I just wish it would get here.

The ramifications of all of these diesel fuel price increases are crazy. There will be surcharges added to everything hauled by a truck or train. So far in 2026, very little is delivered by EV or drone.

At the end of the day, farmers will have to deal with whatever the diesel market throws at us. Higher diesel prices will make us look harder at every pass across the field, every load hauled and every management decision that uses fuel. Maybe that is not all bad. Farming has always been about doing more with what we have, and expensive diesel just puts a little more emphasis on that. The crop still needs to get out of the field. I'll just "feather the throttle" a little more.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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