Red diesel prices soar on back of oil rises

RED DIESEL prices have gained this week 1p/litre as oil climbed to record highs on the back of Middle East supply fears.

As Brent crude hit $63/barrel, red diesel reacted immediately, rising to an average 34.5p/litre.

That compares to about  22p/litre at the beginning of the year, said John Ringwood of supply group ACT.

Farmer Robert Maylam from Kent said he was guarding against further increases by buying in extra supplies.

“My fuel costs are going through the roof. An awful lot of farmers could be put in a situation where it might be make or break.”

Fuel was becoming so expensive he was looking at the possibility of setting up a bio-plant next year, he added.

David Canty of rural consultant Strutt & Parker said the fuel bill one of its 300ha (741-acre) arable farm using min-till cultivations had risen almost 190% since 2002 to £31/ha (£12.50/acre).

“Put in perspective that is now half a tonne of wheat at current prices.”

NFU combinable crops chairman Arthur Hill said he had allocated an extra £5500 worth of fuel to cover his 790ha (1950 acres) of cereals.

Autumn cultivations are also set to be more expensive, with no respite in oil prices predicted throughout the winter.

“The forward price curve is over $60 dollars/barrel until 2011, so I think that tells you everything,” said analyst Kevin Norrish of Barclays Capital.

However, Vincent Cable, Liberal Democrat shadow Chancellor and former chief economist at oil firm Shell, said talk of years of high prices was premature.