Ag News

Kemp extends suspension of fuel tax; diesel costs strain farmers

by Georgia Farm Bureau

Posted on Nov 09, 2022 at 0:00 AM

In Georgia, the cost for diesel averaged $4.96 per gallon on Nov. 8 and has tracked slightly below the national average according to the American Auto Association, but still up $1.44 per gallon over the same time in 2021.

Amid concerns about diminished fuel supplies Gov. Brian Kemp signed two executive orders on Nov. 4 extending the temporary suspension of the state motor fuel and locomotive fuel tax as well as the supply chain state of emergency. Both orders are effective through Dec. 11. Kemp’s executive orders can be found here.

On Oct. 31, the national average price of diesel was $5.32 per gallon, more than $1.50 above the same time last year. While prices are below the $5.81 peak in June, the high cost of fuel is hitting farmers hard as they navigate the fall harvest season.

American Farm Bureau Federation economists analyzed the factors driving up fuel prices in its Nov. 3 Market Intel report.

A ban on U.S. imports of petroleum from Russia, lower domestic production capacity, and seasonal demand are all contributing to higher costs. Russia provided 20% of the petroleum imported into the U.S. in 2021, but that was halted after Russia’s invasion of Ukraine. Beyond the impact of Russia, since 2019, domestic diesel production capacity has dropped by 180,000 barrels per day. Several plants closed during the coronavirus pandemic and are not yet back online.

AFBF President Zippy Duvall sent a letter to President Joe Biden on Nov. 4, calling on the administration to bring more domestic supply online, reducing costs to all Americans.

“Our nation’s food supply is driven by diesel,” President Duvall said in the letter. “Every input that arrives on our farms and ranches is transported by a diesel engine, whether that is by boat or barge, rail or truck. Our crops are planted by diesel engines and harvested by diesel engines. High diesel prices are severely impacting our farmers and ranchers, causing increased costs to consumers, and adding to food insecurity.”

National diesel prices are expected to average $4.86 per gallon through the end of the year, according to government projections, and $4.29 per gallon in 2023.

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