Red diesel prices have hit a new high.
Spot prices are riding between 53.5p/litre and 55p/litre. In the four days following Easter – and the Chancellor’s post-Budget hike in duty of 1p/litre – on-farm prices have risen by 2.65p/litre.
“Overnight (6 – 7 April) the market rocketed by 1.65p/litre, equivalent to 3.2% in just 24 hours,” said Louisa Haden of fuel supplier Callow Oils.
“This is by far the biggest jump we’ve seen in years. Futures prices are consistently trading above the spot rate which suggests there will be no significant easing in the market in the short-term.”
This reflects the situation on the Crude oil market where prices have climbed from $81/barrel to over $87 in just one week – a new 18-month high. That equates to an increase of 70% compared with prices one year ago.
However extortionate this might seem, it is still a long way off the $147/barrel seen in July 2008. That said, thanks mainly to steady increases in duty, retail prices are now at the same level as those at the time of that market spike.
Much of the current high is attributed to the weak pound, with Crude traded in dollars. The US economy has recovered faster than anticipated with the effect that gas usage is now higher than expected. This demand has driven energy costs up across the board, according to market commentators.
Somerset contractor Alan Butt has seen his fuel costs rise dramatically.
“One year ago we were paying about 38p/litre for red diesel. This season I reckon we’ll be averaging somewhere in the mid-50s.
“Somehow I’ve got to pass that additional cost onto my customers. I just hope they see a rise in milk prices to support our increased rates.”
• Help Farmers Weekly and the NFU build a better picture of farm inputs by taking part in our farm input price monitor here.