Events half way around the world are having an effect right here in Texoma. Violence in Libya and the rest of the Middle East are being blamed, in part, for rising energy costs. That could mean a big hit for farmers at market.
Texas Agrilife Extension Economist Dr. Parr Rosson said rising oil prices "could put some real economic pressure on costs in agriculture." Dr. Rosson said Libya is at a flash point. And that's of concern because Libya is the largest oil producer in Africa.
Wichita County Extension Agent Fred Hall said he's seen reports indicating oil could reach $200 a barrel. "That, in essence," Hall said, "will double the price of products that we're buying." Hall said fuel for tractors, fertilizer and pesticides all come, largely, from oil. Soaring costs mean a lean margin for farmers at market.
Dr. Rosson said the sluggish economy has also hit farmers hard. Add drought-like conditions here in Texoma, and farmers are facing a triple threat. "If we have no moisture to grow," said Hall, "then there's very little reason to put fertilizer or additional chemical on."
Hall said consumers will likely feel the effects of the Middle East uncertainty too. Gas prices are already topping $3 a gallon and, said Hall, food prices are expected to creep up as well. But, Hall stressed, rising food prices will likely not be a result of increased cost to farmers. It's increased shipping costs, he said, that largely contribute to rising food prices.
The US Energy Information Administration lists crude oil futures at $98.10 a barrel. That's up $19.24 from this time last year.
The EIA said Libya produces around 1.8 million barrels of oil a day. The US imports over 6 million barrels a day from its top five suppliers. Libya is not on that list.