An energy crisis is putting significant pressure on American farmers, raising the costs associated with operating machinery, managing livestock, and fertilizing crops.
The conflict in Iran has disrupted global supplies of crude oil, refined fuels, and natural gas, pushing up the prices of two crucial farming inputs: diesel fuel and fertilizer. According to an analyst, farmers can only cut back on their consumption of these inputs to a limited extent without risking their yields or profits.
Chris Johnson, president of the American Energy Leadership Institute, commented on the situation, saying that both the energy and agricultural sectors operate on tight margins. Even a small price increase could be catastrophic, particularly for smaller farms and refineries.
This energy strain can extend beyond individual farms; elevated energy prices can also influence food costs due to their impacts on processing, transportation, and retailing activities, as noted by the U.S. Department of Agriculture.
“We are fighting for survival.”
Matt Bell, 52, has over 30 years of farming experience in central North Carolina, where he grows soybeans, corn, and wheat while raising cattle on more than 1,000 acres. He mentioned that skyrocketing fuel prices are a major concern…
— CBS News (@CBSNews) September 18, 2026
Concerns have also emerged within the refining industry and among energy analysts regarding potential restrictions on U.S. diesel exports. Recently, two Republican Representatives, Tim Burchett and Clay Fuller, introduced legislation aiming to temporarily halt diesel exports. Moreover, another proposal would enforce an export ban whenever average diesel prices exceed $5 per gallon for two consecutive weeks.
At one point, President Trump entertained the idea of limiting diesel exports to help address skyrocketing fuel prices. However, he later clarified that the U.S. would not pursue such measures after discussions among G7 nations to release emergency oil and diesel reserves.
Johnson expressed that while lowering diesel costs is crucial, enacting an export ban as suggested by some lawmakers could be detrimental. He argued that it might benefit one low-margin industry momentarily but would heavily impact another—the downstream oil and gas refining sector.
If key exports were restricted, refiners might cut production in response to an oversupply, potentially reducing the availability of other fuels, which could inadvertently drive their prices up as well.
The American Petroleum Institute echoed this sentiment, indicating that refineries along the Gulf Coast produce more diesel than is consumed within the region and depend on exports to manage the surplus. Blocking these exports could lead to full storage facilities, forcing refiners to process less crude and resulting in decreased outputs for diesel, gasoline, and jet fuel.
Johnson noted that a reduction in diesel exports would prompt refiners to lower production, ultimately leading to sustained high prices for both oil and diesel.
Diesel remains a vital fuel for American agriculture. Farmers rely on it to power heavy equipment used for field preparation, planting, and harvesting. Additionally, diesel-powered trucks are essential for transporting agricultural supplies like seed and fertilizer, as well as moving produce and livestock from farms to processing plants and markets.
In an effort to alleviate fuel cost pressures, Trump signed an executive order opening access to tax-free dyed diesel—typically designated for off-road use—to highway trucks. This order directs the Treasury Department to explore whether it can defer federal diesel excise tax payments due through the end of the year without incurring additional fees.
Despite these measures, industry experts caution that the same fuel supply ultimately feeds both dyed and clear diesel, suggesting that while this strategy may offer temporary relief, it doesn’t fundamentally address the supply issues driving up prices.
Moreover, this action could ignite tensions between agricultural and trucking industries. Farmers are wary that allowing highway trucks access to dyed-diesel reserves during harvest season could deplete supplies allocated for their needs, despite the administration’s assertion that it would lower transportation costs.
The national average for diesel reached a staggering $6.52 per gallon in October, a sharp increase from approximately $3.72 before the onset of conflict. This surge has strained diesel supplies just as farmers enter the harvest period.
Fuel requirements vary widely among different crops and types of machinery. Research from Iowa State University indicates that typical field operations might consume several gallons of diesel per acre when all activities are considered. Thus, for expansive farms, even slight increases in fuel costs can accumulate into significant financial burdens over a season.
Fuel expenses continue to impact livestock as well. Jackie Moore, operator of Joplin Regional Stockyards in Missouri, noted that the cost to transport cattle recently rose from $4.75 to $5.75 per mile in just a few weeks, significantly inflating the expenses associated with shipping cattle over long distances.
The wars in Iran and Ukraine had already propelled an agricultural commodity index up more than 13% in August, marking its largest monthly rise in fourteen years. This, combined with rising diesel prices, adds yet another layer of difficulty to a food supply chain already under strain.
Low-Margin Challenges
The ongoing conflict also affects fertilizer costs through two distinct energy channels.
Natural gas, which is transported via domestic pipelines, could provide some insulation for American fertilizer production against overseas supply disruptions. As the main ingredient in ammonia production—the basis for nitrogen fertilizers such as urea—increased natural gas prices can lead to higher costs for fertilizer plants, which might then cut back on production. The war has led to losses of approximately 36 million metric tons of liquefied natural gas and caused significant spikes in spot LNG prices.
TC Energy manages a vast pipeline network across the U.S. and supplies a substantial portion of the daily natural gas consumed. Natural gas plays a vital role in the production of ammonia fertilizers that farmers rely on.
On the other hand, crude oil refining intersects with another segment of the fertilizer market. Refineries extract sulfur from petroleum products for fuel compliance, generating elemental sulfur as a byproduct. This sulfur gets converted to sulfuric acid, which is then used to create phosphate fertilizers.
Johnson emphasized that the energy and agricultural sectors are highly sensitive to market fluctuations due to their low margins. This situation creates complex relationships between the energy supply disturbances and the availability of fertilizers, as diminished crude processing may result in less recovered sulfur, obstructing phosphate fertilizer production.
While LNG from abroad can be subject to various global shipping challenges, North American natural gas benefits from a more robust infrastructure system, which insulates it from many of these external disruptions.
Initially, the crisis raised alarms about potential global fertilizer shortages following declines in shipments from the Gulf, with imports of urea from Gulf suppliers plummeting by 85% and urea prices soaring by 70% in the second quarter of 2026 compared to the previous year. In addition, China imposed restrictions on several fertilizer products post-war, which further tightened supplies already impacted by the declines in Gulf shipments.
