Economist says reduced gasoline use will negatively impact farmers
An economist with CoBank says the trend towards reduced gasoline use will have an impact on farmers and the transportation sector.
Teri Viswanath tells Brownfield as people transition to electric and more efficient gasoline vehicles, less gasoline will be produced and, “43% of the refining yield is gasoline, 28% is distillate and that includes diesel, so if you don’t need the gasoline, you may not be producing enough diesel over the long run.”
Viswanath says only 28% of a barrel of crude oil ends up as diesel fuel and heating oil, so reducing gas production would likely lead to higher diesel prices, and ramping up biodiesel production might not be the answer. “When we take a look at the refineries that have converted over to biodiesel, they’re not getting the same level of throughput, so you can’t just backfill us with biodiesel, unfortunately, to get us out of this problem. It’s going to be an important substitution for this market, but not enough.”
Viswanath says, “Our diesel engines power about 75% of all farm equipment. They transport 90% of our U.S. farm products to market, and they pump about 20% of agriculture’s irrigation water, so that’s a large dependency on something that we might find, you know, high priced.”
Viswanath wrote a report on gasoline and diesel demand, which is available on CoBank’s website, here.