Market Morsel: Crude oil fueling diesel

Market Morsel

The cost of fuel is a significant cost to many farmers, and it’s important to keep a close eye on it. This is both due to its direct cost (power tractors etc.), and its indirect cost (see here ‘Don’t be crude‘).

The price of crude oil has been on a solid upward trajectory during the second half of 2020. This has a direct flow to diesel, which makes sense as it is the precursor ingredient.

The average price of diesel around Australia is A$1.21 (and A$1.26 for petrol). The same week last year was 95¢ for diesel and 83¢ for petrol.

Whilst this is a large rise year on year, the reality is that pricing is still below the average (A$1.29)from 2010 to the COVID’ crisis’ in March 2020.

Whilst I’d rather we all paid a bit less for our fuel, the rise year on year should have a minimal impact on farmers’ profitability this year.