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THURSDAY, SEPTEMBER 10, 2026   |   SPECIAL REPORT & ANALYSIS

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Diesel Surge Squeezes Farms and Timber as EIA Raises 2027 Forecast

Higher fuel costs intensify rural strain and scrutiny of U.S. diesel exports

Analysis  ·  September 10, 2026

The Energy Department’s Energy Information Administration has raised its forecast for average U.S. retail diesel prices in 2027 to $4.40 a gallon, up 33 cents from $4.07 previously, extending the prospect of elevated costs for agriculture, logging and transportation. The revision was released Wednesday, Sept. 9. EIA also increased its fourth-quarter 2026 diesel forecast to $5.55, from $4.86.  [EIA forecast comparison]

 

THE FORECAST REVISION

The immediate pressure is greater still. EIA’s latest weekly reading, released Sept. 9, put national on-highway diesel at $5.967 a gallon, up 36.8 cents in a week and $2.201—about 58%—from a year earlier. The Midwest average reached $5.946, while the West Coast averaged $6.987. These retail prices include taxes; delivered agricultural and logging fuel prices differ, particularly for qualifying off-road use.  [EIA diesel price update]

Figure 1. U.S. on-highway retail diesel prices, week of Sept. 8, 2026, versus the year-earlier national average. Prices include taxes. Source: EIA weekly retail price update.

The higher 2027 forecast does not mean EIA expects prices to rise continuously. Its projected annual average remains below the $5.07 forecast for 2026. The revision means the agency anticipates less relief than it expected a month ago—a consequential distinction for businesses preparing next year’s budgets.  [EIA forecast comparison]

Table 1. EIA Short-Term Energy Outlook retail diesel price forecasts, $ per gallon. August 2026 annual-average figure not shown in the comparison table. Source: EIA STEO forecast comparison, Sept. 9, 2026.

Figure 2. EIA’s September revisions to its fourth-quarter 2026 and 2027 retail diesel forecasts, with the 2026 annual-average forecast for reference. Source: EIA STEO.

SUPPLY OUTLOOK

The supply outlook explains the concern. EIA expects U.S. distillate inventories, which include diesel and heating oil, to fall below 100 million barrels in September and remain below the 2021–2025 seasonal low through most of 2027. Reduced overseas supplies have increased demand for U.S. exports. Meanwhile, autumn refinery maintenance typically reduces production just as harvest and subsequent winter heating requirements increase consumption.  [EIA petroleum outlook]

FARM EXPOSURE: FIELDWORK AND FREIGHT

For U.S. agriculture, the squeeze reaches both fieldwork and freight. Diesel powers tractors, combines and other equipment, leaving producers limited ability to substitute another fuel during harvest. Reuters documented the strain earlier this year, reporting that sustained higher prices could increase illustrative row-crop fuel expenses from roughly $20 to $30 an acre. That estimate dates from June rather than being a new September industrywide calculation.  [Reuters farm-cost reporting]

The financial exposure is straightforward: every additional $1 a gallon adds $10,000 to the cost of buying 10,000 gallons, assuming unchanged consumption. Beyond farmers’ own tanks, higher diesel costs increase the expense of hauling grain, livestock, feed and perishable products. How that burden is divided among producers, transporters, processors and consumers depends on contracts and market conditions; higher transportation costs can eventually reach food prices.  [Reuters diesel-market reporting]

Figure 3. Illustrative farm fuel-cost exposure: Reuters’ June estimate of row-crop fuel expense per acre (left) and the cost of 10,000 gallons of diesel at successive price levels, assuming unchanged consumption (right). Sources: Reuters; author’s arithmetic.

TIMBER: LONGER HAULS, THINNER MARGINS

The timber industry faces similar exposure, compounded by the distance between forests and operating mills. The Forest Resources Association identifies trucking as essential throughout the wood supply chain and has placed fuel-price volatility on its September regional meeting agenda. Rising transport costs affect logging contractors, mill procurement and delivery of finished products.  [FRA transportation overview, FRA fall industry outlook]

An April WVTM report described an Alabama grower unable to secure logging services as mill closures and diesel costs made hauling uneconomic.  [WVTM reporting]

The economic implication is that higher hauling costs can reduce the amount available to pay landowners for standing timber unless mills raise delivered-wood prices. Contractors unable to recover the additional expense face narrower margins. Where a nearby mill has closed, longer trips magnify the fuel burden and can make lower-value wood particularly difficult to market.

EXPORT-POLICY PRESSURE

Pressure for federal relief is already documented, but a diesel export ban remains unconfirmed. The Financial Times reported Sept. 4 that record diesel prices were increasing pressure on the Trump administration ahead of November’s elections. EIA’s finding that strong exports accompany unusually low domestic inventories provides a concrete supply backdrop to the export-policy debate. The reporting reviewed does not establish that the administration has decided to ban diesel exports.  [Financial Times reporting, EIA outlook]

An export restriction’s effects would depend on its design, transportation capacity and refiners’ production response. In its analysis of the 2022 export-ban debate, the American Fuel & Petrochemical Manufacturers warned that Gulf Coast supplies could not simply be redirected everywhere they were needed. The refining trade group argued that restrictions could raise the cost of imports into the East Coast and eventually reduce refinery output, including gasoline produced alongside diesel. Those are the industry’s stated objections, rather than a guaranteed outcome for every possible restriction.  [AFPM analysis]

BOTTOM LINE

For farm and timber budgets, the key uncertainty remains how quickly global supply recovers. EIA’s expected easing in diesel refining margins depends on improved Middle East flows. Continued disruption beyond year-end would leave those margins higher than its forecast assumes—and put the anticipated 2027 price relief at risk.  [EIA petroleum outlook]

AG POLICY & MARKETS DAILY   |   SPECIAL REPORT  |  DIESEL PRICES — THURSDAY, SEPTEMBER 10, 2026