December 22, 2014

Farm fuel not expected to rise

Local oilman optimistic about the future

Posted

STANDISH — Joe Knochel is optimistic about agricultural fuel prices.

The owner and operator of Knochel Oil Company said things are getting better for farmers as the cost of gas is getting back to where it was in 2007.

“With market parameters, we would think that the fuel is going to be cheaper. We are almost back to where we were in 2007, before the economy hit the fan,” he said about whether fuel is going to go higher or lower in price this summer. “I’m optimistic. It is still elevated, but it’s getting back to normal. We’ve got plenty of supply now.”

Knochel, who serves more than 100 farms in a five county area, said that 2008 was a year that really hit local farmers hard in the pocket and that they’re still rebounding two years later.

“2008 was the worst. In 2008 we had $4 a gallon fuel, and that was hard on the farmers. What we need to do is let these guys recover a little,” he stated. “A month ago they were predicting that we would be $3-$3.50 a gallon, and we’re about 50 cents below.”

Though Knochel cited the predicted price of consumer regular gasoline, he says that the cost of gas commonly used on the road is a good meter for the cost of farming fuel, even though farmers don’t have to pay state and federal taxes, which is about 50 cents a gallon.

“Usually, what is happening (to) cars is happening on the farm too,” Knochel said. “The big problem we have is fluctuation on the market.”

Though an article posted at USATODAY.com on March 9, 2010, cited analysts who expected regular gasoline for cars to go up to $3 a gallon this spring, the very same article said that $3 was expected to be the limit, and that gas could stay cheaper than that for the entire summer.

Oil Price Information Service Analyst Tom Kloza was quoted in the article as saying, “Three dollars a gallon is a pretty rich price for 2010.”

Knochel also said farmers should be able to put money elsewhere to help their farm operate, thanks to the falling fuel cost.

“Farmers have an input cost. In that input cost is fuel, seed, fertilizer and spray. Obviously, if the input cost is lower, that’s less money in the ground,” said Knochel. “ It makes it more affordable.”

With gas prices getting better, some might think that Knochel’s customer base is expanding.

While the cost of fuel is giving relief to local farmers, he says his sales are actually lower.

“Sales have actually been generally lower because of the economy. That is because everyone is cautious about what they’re burning,” Knochel said. “They use a certain amount no matter what.”

Though everybody who drives a motorized vehicle has to worry about the cost of fuel, Knochel said that many people don’t realize how much farmers risk.

“There’s less than 2 percent of the world’s population that are farmers, and we feed the world. People fail to realize that when they sit down at the dinner table that a farmer risked everything he had to get (dinner) there,” said the farm fuel supplier “To me, it is just astonishing how people don’t realize how much farmers risk.”

Copyright © 2014, Sunrise Publishing. Powered by: Creative Circle Advertising Solutions, Inc.