The country is experiencing an unprecedented pinch at the pump, as diesel prices hit record highs this month. Truckers, farmers and ranchers are watching their expenses jump, and an immediate solution to rising fuel prices isn’t clear.
Doug McGee with the Wyoming Department of Transportation (WYDOT) said that Wyomingites likely drive more on their daily commute than any other state in the nation, and the price of fuel is a major factor in making that commute. However, WYDOT hasn’t seen a major change in fuel tax revenue despite the fluctuation in prices over recent months.
“We have not seen any drastic changes during the past few months,” said McGee. “On the bigger picture, as far as fuel tax collections, we’re actually seeing a slight increase year-to-year when you look at our fiscal year. Each year growing a little bit since the pandemic.”
McGee couldn't make predictions for the commuter driver or gasoline prices, but believes that, for now, trucking will continue rolling as the “warehouse on wheels” that Wyoming depends upon. But those warehouses depend on diesel, and as the price increases, so do disruptions to a variety of industries.
Disruptions hit Wyoming
Wyoming exports crude, petroleum and other energy and freight products overwhelmingly via commercial shipping on highways. Truckers say an increase in diesel prices leads to a general increase in the price of anything shipped on that truck.
Other diesel drivers and small business owners, like Greg Baggerly, who works for MG Masonry, said they might go out of business.
“I’ve never seen it this high in my life,” said Baggerly. “I’m getting [about] ready to get on welfare and hang out at the house if they don’t do something.”
Baggerly said there’s not much alternative to prices like these. He can pass costs on to the consumer, but he’s aware that could drive down business.
While paying nearly $6 a gallon to fill up extra fuel tanks at a station in Laramie, Baggerly touted his past support for Pres. Trump. But staring at the cost of fuel displayed at the pump, he was perplexed as to how the president was putting his livelihood at risk.
“The things that he did was to make our country stronger, until right now. And right now, he’s bringing us to the brink,” said Baggerly. “I mean, we can’t survive much more of this.”
Questioning long-term viability and looking for ways to cope with higher prices has become common among Wyoming’s agricultural community as well. However, ag folk are experiencing a triple gut punch of higher diesel prices and tariffs on vital markets like Canada and Mexico, all amid a nearly state-wide drought.
In the tiny town of Aladdin, Wyoming, Wilma Tope and her husband Jay were already feeling the effects of the drought well before diesel shot up.
“We had a piece of property up by Devils Tower. That dam has never been dry since the 1960s,” said Tope. “And it is dry this year, so we were unable to use that land for grazing.”
Tope has tried to compensate by reducing the size of her herd, moving some of their cows up north to Montana. She avoided putting fertilizer down this year due to the expense. She said she and her husband just have to hope it works out, a sentiment shared by other ranchers making those same tough choices.
“I know that there's a lot of people that are downsizing,” said Tope. “I know our neighbors have already sold their calves, which normally they wouldn't sell until probably the middle of November, so people are selling their calves early because there just isn't feed for them.”
Even farther north in Montana, things don’t look much better. Art Hayes owns Brown Cattle Company in Birney. He’s also seeing farmers sell calves early or search for alternative feeds to hay, as it is harder to grow in drought conditions. While Hayes has managed to grow and sell hay, he said it’s just not enough.
“There's just no hay available,” said Hayes. “I mean, part of my operation is I sell hay, and I’ve had to turn people down. I just cannot produce enough to meet the demand.”
Baggerly, Tope and Hayes linked the rise in fuel prices to supply chain disruptions internationally. Baggerly hoped the president still has something “in his back pocket,” but said there might be “J6 type action” if prices go a dollar higher.
Hayes believed prices could be $10 by December if the U.S. does not remove itself from the conflict in Iran. As for Tope, she was upset with the impact from tariffs and oil companies for profiting off a time of hardship for taxpayers. She hoped this moment leads to reflection within the ag community.
“I think it's time for those of us that are engaged in family farming and ranching [to] start voting for policies that benefit the consumer,” said Tope. “Not the big corporations, because when the consumer benefits, we all benefit. I guess you might say that the ag community has gotten what it voted for, and it is not pretty.”
Why are prices so high?
There’s no singular reason as to why diesel prices have jumped. Instead, it’s a combination of supply disruptions.
The U.S.-Israeli war on Iran has created dangerous conditions in the Strait of Hormuz, reducing what was once a channel for roughly a quarter of the world’s energy needs. It now sees increased shipping costs, insurance rates and fewer vessels transiting the strait daily than before the war.
Another important factor is refining. Crude oil can't be put directly into a gas station pump. First, it must be refined into diesel. Refineries taken offline through conflict between Ukraine and Russia and across the Middle East took what Reuters estimates to be 1.6 million of diesel and gasoline products out of the market. Diesel, however, is also heavily used this time of year as farmers begin harvesting and countries prepare for winter.
If supply chain disruptions and conflicts continue, the supply may tighten even more. Less crude oil being shipped due to conflict, and fewer refineries to convert that crude into diesel, creates higher prices at a time when more industries and people need more fuel.
Few solutions on the horizon
On the state level, Gov. Mark Gordan extended an executive order authorizing emergency permits for those hauling oversized or overweight amounts of hay. This was in response to droughts and wildfires, however, not a rise in energy prices.
In past months, Sen. John Barrasso called for lower regulation on where companies can drill, and Rep. Harriet Hageman has called for less climate regulation and litigation to help lower diesel prices. Pres. Trump had floated a diesel export ban, in hopes that keeping more American energy at home may help to lower gas prices. However, according to reporting from Cowboy State Daily, Sen. Cynthia Lummis is against a proposed export ban, while The Hill reports Barrasso said the president was considering many options. Since floating the idea, the Trump administration has faced criticism from oil and gas executives and ultimately scaled back on the idea.
The United States also has the Strategic Petroleum Reserve (SPR), massive underground salt caves from Louisiana to Texas. These man-made, underground storage facilities are meant to hold emergency crude oil for times like these. However, the SPR has been tapped a few times over the Biden and Trump administrations. Now, levels are at their lowest since 1983.
While the Trump administration plans to release more barrels from the SPR, there is a risk. The low levels and the process of pulling oil can damage the massive storage units.
Ultimately, most of the measures are temporary. Prices are likely to remain high until global shipping and production can stabilize. Until then, a world that continues to increase its oil consumption will have to reckon with a dramatically squeezed supply.
