Agricultural producers have endured significant volatility in fuel costs in recent years. In 2020, prices plummeted when pandemic-related disruptions caused demand to collapse. As the global economy began to recover and the Russia-Ukraine war broke out, fuel costs surged from 2021 to 2022, then started leveling off at the beginning of 2023. As shown in Figure 1, in the Rocky Mountain region which includes Idaho, the average annual price of regular gasoline dropped 10% in 2023 and another 12% in 2024. Diesel followed a similar trend, falling from $4.36 to $3.71 per gallon (a 15% drop) in 2024.
One primary factor behind these declines was the drop in crude oil prices, which make up roughly half the retail cost of gasoline and diesel. The remaining half comprises refining costs and profits, retail and distribution costs and taxes. Although changes in crude oil prices do not pass perfectly to the pump, a $1-per-barrel change in the price of oil would translate into a 2.4-cent-per-gallon change in gasoline and diesel prices (as one barrel contains 42 gallons). On average, benchmark Brent crude oil prices fell $19 per barrel in 2023 ($82 per barrel) from 2022 levels ($101 per barrel), then dipped another $2 in 2024 ($80 per barrel). This decline, driven by weakened growth in global oil demand and improved supply, accounted for most of the reduction in diesel and gasoline prices over the last two years.
For 2025, the U.S. Energy Information Administration (EIA) projects a relatively stable and slightly bearish fuel market. The EIA’s January outlook puts Brent crude oil in the $72 to $77 per barrel range, averaging around 7% lower than the level in 2024. In the Rocky Mountain region, gasoline prices are expected to average $2.80 to $3.50 per gallon, while diesel could range from $3.30 to $3.65 per gallon, respectively. Seasonal demand patterns will continue to shape price fluctuations throughout the year. Gasoline prices typically peak during the summer travel season due to increased consumer demand. Meanwhile, although average diesel prices are projected to be lower in 2025, the EIA anticipates that prices will rise each quarter as the year progresses.
Key factors for lower prices in 2025 include a slower growth in China’s oil demand (due to slower economic growth and greater adoption of renewables in the country) and rising oil supplies from non-OPEC countries such as the U.S., Canada, Brazil and Guyana. Additionally, it is expected that later in 2025, OPEC and its allies may also ease the production cuts first announced in 2023.
For the major crops in Idaho, although local cost data are not publicly available, national data from the USDA (Figure 2) offer a glimpse into how fuel costs have been shifting. For corn, per-acre fuel expenses rose from $24 in 2021 to nearly $35 in 2022, then dropped to $30 in 2023. Fuel costs for barley increased from $18 to more than $25 in 2021-22 before dropping to $21 per acre in 2023. Wheat followed a similar pattern, jumping from $13 to almost $16 per acre between 2021 and 2022, then declining by over $2 per acre in 2023. Across all three crops, 2024 fuel costs are estimated to be around 5% lower than in 2023 – but still above 2021 and pre-pandemic levels.
Looking ahead, the USDA projects fuel expenses for the three crops will edge downward in 2025. Although the decline is likely small (just around 2%), it’s still good news for an industry heavily reliant on fuel for everything, from running machinery to shipping products. With fuel expenses likely continuing to stabilize, farmers can expect more predictable operating costs and potentially healthier bottom lines. That small relief could provide a bit of breathing room in 2025 crop budgets and help offset other rising inputs.
While forecasts point to stable or falling fuel prices, several factors could disrupt the outlook. Tensions in the Middle East remain high, particularly with the ongoing conflict between Israel and Gaza and a production-cut deal between Saudi Arabia and Russia – both of which threaten to tighten global oil supplies and drive up prices. Changes in U.S. foreign policy in the region may further affect fuel availability. Meanwhile, 2025 trade policies are still up in the air, adding another layer of uncertainty. For instance, the new administration's proposed tariff on Canadian imports could negatively impact the energy supply in the Pacific Northwest, where a significant portion of the crude oil refined in the region originates from Canada. Keeping a close eye on these developments will be essential for producers planning their 2025 operations.
