Since the war in Iran started in February, diesel prices have skyrocketed, deepening the financial strain on farmers’ bottom lines. In January 2026, diesel prices were $3.52 per gallon. By August, prices surged to $5.34 per gallon, according to the U.S. Energy Information Administration. The Joint Economic Committee (JDC) shares that farmers in America have spent $1.4 billion more on diesel during the conflict.
“This price increase cuts a pretty big hole in your operating budget,” says Jon Tester, a Montana farmer and former U.S. Senator. “People in production agriculture know margins are close; this makes the margins almost non-existent.”
War and Tariffs Drive Diesel Above $5 Mark
The war in Iran – specifically the closure of the Strait of Hormuz – is driving the surge in diesel prices. However, Patrick De Haan, head of petroleum analysis at GasBuddy, says the war in Ukraine has also played a role. Recent Ukrainian drone attacks on Russian oil refineries have pushed oil prices even higher. Russia produces one out of every nine barrels of diesel globally, he explains.
“Now, for the first time in a single calendar year, we’re seeing diesel prices, again, going back above the $5 mark,” De Haan says.
How Farmers Are Adapting to Diesel Price Pressures
Facing high diesel prices, farmers are searching for solutions. Iowa farmer Alan Mohr has added extra fuel storage to take advantage of price drops.
“The positive with extra storage is being locked in with the fuel you purchase, so you’re not as affected by the day-to-day fluctuations,” says Mohr, who grows corn, wheat and soybeans on 5,000 acres. “The negative is that once you’ve made the purchase, you’re working on borrowed money and paying interest on that fuel.”
Mohr calculates how long he’ll store fuel and the interest he’ll accumulate.
Mike Pasquinelli, a Yuma farmer and president of the Yuma Fresh Vegetable Association, is addressing high diesel costs by focusing on maximizing productivity with each field pass.
“Can we do multiple tasks as the tractor passes through? We need to identify where we can save in possible labor charges and input costs such as fertilizer,” Pasquinelli says in regard to saving money in light of high diesel prices.
Buying diesel sooner rather than later might be wise, De Haan advises, though he acknowledges price movements are impossible to predict. He recommends monitoring escalations between the U.S. and Iran, Ukrainian attacks on Russian oil refineries and hurricane season, all of which could disrupt diesel and gasoline supplies.
“It really depends on how all these situations dovetail together to impact oil markets, and of course, that’s very unpredictable,” De Haan explains.
Rising Diesel Costs Could Force MultiGenerational Farms to Sell
Beyond operational adjustments, Pasquinelli suggests policy solutions could help. He believes reducing overregulation on diesel and gas, for example, could lower costs.
“Even the price of gas, the amount of road taxes, the amount of regulations, the different formulations that are required for clean air and things, are they really sustainable?” Pasquinelli asks.
Tester predicts if diesel costs, among other inputs, continue their current trajectory, numerous multigenerational family farms will be forced to make tough decisions. The situation reminds him of the early 1980s, when high interest rates devastated rural America.
Tester hopes the JDC’s report will put pressure on politicians to do something about diesel prices.
“[If high diesel prices continue] this will mean fewer farms … and I don’t think that’s good for our food security, I don’t think it’s good for our nation and I don’t think it’s good for rural America,” Tester says.
