May 25, 2021
Jason Schwantz, senior vice president of refined fuels at CHS, talks about recent disruptions in energy supply and what farmers should expect for summer and fall.
For nearly a year and a half, the COVID-19 pandemic has triggered major disruptions in energy supply and demand, and these ups and downs have affected energy supplies on the farm. How did we get to the current situation and what’s ahead for fuel supplies and prices?
“The drop in fuel demand caused by the pandemic hampered refiners because they weren’t able to operate at the highest capacity,” says Jason Schwantz, senior vice president refined fuels at CHS. “It was tough for many refiners to make money, so they throttled back production. In the Midwest, supplies of diesel fuel are running on the low end.”
Responding to the tight inventories, some supply partners have stepped up to help ease fuel shortages, says Schwantz. “Cooperatives and others have done a very good job of maintaining fuel supplies and growers probably won’t see too many disruptions. One trouble spot was around Fargo and Grand Forks because there were a few problems with supply in the pipeline, but CHS has storage facilities in that region and we were able to help customers get through.” Challenges will likely continue for some time, he adds, but the supply side for growers is looking pretty good, says Schwantz.
For the rest of the growing season and into harvest, Schwantz encourages farmers to be ready.
“As we begin to emerge from the pandemic, fuel prices are probably going to continue creeping up a little,” says Schwantz. “With supplies still on the low side, I recommend people make sure their tanks stay full so they don’t have any problems. I think we’re going to have some pent-up consumer demand this summer that will drive prices a little bit higher.”
Renewable fuels are complementary to traditional fuels and may help ease the supply and demand dilemma, says Schwantz. “Renewable fuels provide some of the octane that’s needed in gasoline, which is a great advantage,” he says. “There are renewable identification numbers (RIN) benefits that refiners receive for blending renewable fuels with traditional fuels and meeting government compliance standards. I think it’s good for farmers and refiners to have an octane blend that can help them deal with any fuel shortages. Having this option is a real benefit to rural America.”
Join Jason Schwantz and a roundtable of CHS industry experts on May 27 for “Around the Table Live: Navigating energy trends and policy shifts.” Topics will include: renewable fuel trends, federal energy policy changes and impact of supply/demand disruptions on agriculture. Learn more and register here.