Farm Horizons, May 2006

The impact of increased fuel prices

By Kristen Miller

With spring arriving, farmers are getting back into the fields and construction workers are hitting the road. This makes for quite the busy season for Jim Hughes, who owns JD Oil in Cokato with his wife Donna.

Hughes has more than 600 customers he delivers fuel and oil to, and with fluctuating gas prices, his job gets more difficult.

With gas prices climbing recently, “It’s the small businesses and farming industry that are taking a hit,” Hughes said. “It’s the rural areas that suffer.”

Hughes explained he’s been seeing more and more farmers getting full-time jobs along with their full time farming to help substitute for expenses.

He also explained how farmers aren’t compensated for increased fuel costs, they only get what the price of grain or milk is at the time.

Local farmer Brent Nyquist is a fifth generation farmer. He took over the farm when his father Morris Nyquist died.

“You never had to worry about the cost of diesel fuel,” Nyquist said.

Farmers have to increase their yield or become more efficient to make up for the higher costs, Nyquist explained.

Hughes worked for Wessman Oil. The owner at the time, Lyle Severson, offered Hughes to take over the business when he retired.

It will be three years in August that he’s owned JD Oil, he said. Hughes feels the fluctuations in fuel costs, he said.

JD Oil is one of the only independent oil distributors in the 35-mile radius because big coop’s take them over, Hughes said.

He works throughout the area, from Delano to Litchfield, and from Highway 7 to Highway 55, Hughes said.

His busiest season begins April 1 and goes through November. He offers additional services like changing filters, hoses and nozzles.

Hughes explained his reasoning for the influx of fuel prices, which depends a lot on outside speculators at Wall Street “Playing the futures markets,” and speculating on what the future may hold, he said.

“It’s a combination of many things, it doesn’t help that this is the busy season,” Hughes said.

He remembers a time when gas prices would go up 75 cents a year, now it can do that in a day, Hughes said.

“We’ve had to adapt to the atmosphere that’s out there, we have to produce better products, better prices, and better service, in order to make it work,” he said.

Big companies have showed record profits, like large oil companies such as Mobil and Exxon, “while end suppliers are seeing the worst years they’ve seen in a long time,” Hughes continued.

Hughes used to farm and he enjoys his job and he enjoys the farming industry

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