Cheaper US Gas and Costlier Diesel Split the Farm Energy Outlook
The United States Energy Information Administration has delivered an unusually divided signal for agriculture. Its November outlook lowered the expected Henry Hub natural gas price for the coming winter while raising its forecast for diesel through 2027. The two revisions move important farm costs in opposite directions.
The agency now expects the Henry Hub spot price to average 2.87 dollars per million British thermal units from November through March. That is 16 percent below its October forecast. Yet it raised the 2027 average diesel price to 5.03 dollars per gallon from 4.49 dollars, an increase of about 12 percent in one month.
This matters because gas and diesel occupy different points in the food economy. Natural gas is a major feedstock and energy source for ammonia, the starting material for most nitrogen fertilizer. Diesel powers tractors, irrigation pumps, fishing vessels, harvest equipment and much of the freight that moves crops and chilled food.
Cheaper gas does not mean cheap fertilizer everywhere
A lower Henry Hub forecast can improve the cost position of ammonia plants that buy gas in the United States. Gas is both a fuel and a source of hydrogen in conventional ammonia production, so a sustained price decline can reduce one important operating cost.
But the revision is not a global fertilizer price forecast. Producers in Europe, Asia and other regions face different gas benchmarks. Plant outages, export demand, sanctions, shipping costs, trade measures and the balance between ammonia and finished fertilizer supply can outweigh a change in the United States gas market.
The timing also matters. The 16 percent gas revision covers November through March, while the diesel figure is an annual forecast for 2027. Farmers and fertilizer buyers should not subtract one percentage change from the other as if they were directly comparable bills.
Refining pressure keeps diesel expensive
EIA said refined fuel supplies are expected to remain tight through the end of 2027. Its gasoline forecast also rose, to 3.73 dollars per gallon from 3.56 dollars in October, an increase of about 4.8 percent.
The agency expects Brent crude to average 86 dollars per barrel in 2027, below its forecast of about 104 dollars in November 2026. Normally, lower crude prices would ease pressure on fuel. The higher diesel forecast therefore points to the importance of refining capacity, inventories and product distribution, not only the price of crude oil.
For agriculture, diesel pressure arrives repeatedly. It affects field work first, then crop collection, processing deliveries, cold storage generators and final distribution. A farm may benefit from a lower nitrogen offer and still face a larger energy bill if harvesting and transport consume more diesel.
The effects will differ by business
North American ammonia producers with secure gas supply could gain a relative advantage. Fertilizer importers may see less direct relief if freight, currency or regional gas costs stay high. Grain farms with heavy machinery use, irrigated operations with diesel pumps, fishing fleets and long distance food distributors remain more exposed to the fuel revision.
Consumers should not assume an immediate rise in grocery prices. Fuel is only one component of food costs, and competition, inventories, wages, packaging and crop supply can offset it. The outlook instead raises the risk that transport intensive products will retain cost pressure even if some fertilizer inputs soften.
What to watch next
Three indicators will test the split outlook. First, Henry Hub prices and ammonia plant operating rates will show whether cheaper gas reaches fertilizer production. Second, distillate inventories and refinery utilization will indicate whether the diesel squeeze is easing. Third, freight rates and farm fuel contracts will reveal how much of the wholesale change reaches producers.
EIA also expects United States liquefied natural gas exports to reach 19 billion cubic feet per day by 2027. Strong export demand can tighten the domestic gas balance even when storage is comfortable, which is one reason the lower winter forecast should be treated as a current outlook rather than a permanent shift.
Primary source: United States Energy Information Administration, November Short Term Energy Outlook release, November 10, 2026
Methodology: Agrilinkage compared the numerical revisions stated by EIA with its October forecast values. Percentage changes are rounded to one decimal place. The cover is an original conceptual editorial image and does not depict a specific facility or event.
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