Oil prices impacting Kansas industry

GARDEN CITY, Kansas– On Wednesday crude oil was trading at about $60 a barrel, and with cheap oil comes cheap input costs on the farm.

“Your fertilizers are tied to the price and the energy it takes to run a farm these days, the diesel and the gas,” said Charlie Sauerwein, Merchandising Manager for Wind River Grain.

So, while lower oil prices are obviously a good thing at the gas pump, they can also mean lower prices for the grocery store.

With corn growers relying on energy to operate, some experts say those oil costs will keep corn prices down.  However the price can also be attributed to record yields.  With high prices last year, more farmers planted corn this year and weather cooperated.

“It’s a weather situation and you can’t control weather, so we just happened to hit record yields this year,” Sauerwein said.

Experts agree that market values for petroleum influence other commodities, but right now finding a correlation would be difficult.

“It’s a little harder now, because it is moving quickly.  You’ll see commodities such as corn and soybean have huge moves also in one day,” said Vice President of Petroleum at the Garden City Co-op, Pete Maestas.

Oil is driving ethanol prices down, which means some producers could be taking a hit.

“So far, the ethanol industry, you know they’ve seen their margins compressed a little bit,” Sauerwein said.

While inexpensive foreign oil helps with travel and food costs, it could lead to problems for domestic energy producers.

“If we shut the oil patch down out here, it’s going to be devastating for a lot of people in a lot of places,” Maestas said.  “We’ve been hounding everybody to actually take care of their own needs, in my opinion we’re close to doing that.”

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