Farmers, who are already paying over 100 percent higher fuel costs compared to 2002, may not see any relief anytime soon, according to one government energy specialist.

Michael Burdette, Energy Information Administration (EIA) petroleum analyst, told Agriculture Online on Monday that new government regulations on ultra-low sulfur diesel and higher crude oil prices will continue to keep diesel prices high.

"We don't see crude oil prices continuing their rise like this past week's surge over $72.00 per barrel. However, we don't see it breaking and heading significantly downward anytime soon," Burdette said.

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Over the next year or two, the global crude oil supply is expected to remain flat, Burdette said. "We don't see the supply drastically heading in one way or the other."

In the past six months in Iowa, diesel prices have averaged 2.74 per gallon, compared to $1.29 in 2002, according to the Iowa Department of Natural Resources.

In the U.S., fuel and fertilizer costs for planting corn on a farm managed for high yields run an estimated $124 per acre. That compares with a $38 per-acre cost for soybean growers, according to Food and Agricultural Policy Research Institute's (FAPRI) Fertilizer and Fuel Outlook for Spring 2006.

Using a national six-month average of $2.22 per gallon, FAPRI's report estimated the per-acre cost of fuel to till, plant, spray, and harvest a crop is about $11 for corn , $7 for soybeans, and $6 for wheat.

Burdette was quick to point out, if a U.S.-Iran war broke out, there would be outside risks.

"Military action against Iran would push global crude oil prices up significantly," Burdette said. "In the last month or two, Iran has been a huge influence in upward crude oil prices without a single barrel going off the market. The rise has been based on the concern that a war could happen. If it does, it will be huge."

With 2006 stocks at a higher level than a year ago, a bigger concern for the diesel market is the introduction of ultra-low sulfur diesel.

By 2007, U.S. diesel refineries must be producing 80% ultra-low sulfur for highway vehicles. For off-road, the 2008 model year of an engine 75 horsepower or less will be required to include the new cleaner emission controls. By 2010, tractor and combine fuel will be required to be at 15 parts per million sulfur levels.

In order to comply, the diesel refineries will need to make adjustments to equipment and shipping procedures. Therefore, EIA estimated a $0.04-$0.05 per gallon increase in ultra-low diesel refining.

As global crude oil production is increased, more and more of the product is heavier containing more sulfur, according to Burdette. At the same time, the products that are made from them are being required to contain less and less of the sulfur to meet environmental specifications.

"It's becoming more and more difficult to run a refinery with worse crude," Burdette said.

One of the biggest concerns is not the distribution of ultra-low sulfur, but what it will do to the distribution of other fuel products, Burdette said.

"Trying to move ultra-low sulfur diesel through the existing pipeline system, without getting it contaminated with the other products like jet fuel, is a big challenge to the industry," Burdette said.

Meanwhile, like the switchover from the fuel additive MTBE to ethanol, getting the truck stops and semi-tractor trailer engines switched to ultra-low sulfur diesel will be challenging, Burdette said.

"Anyone buying a 2007 over the road truck is going to have to have the new diesel product. Running the existing fuel would damage the pollution control equipment. Conversely, older diesel engine owners don't want to switch over until they have to because of concerns about the lubricity of the new fuel," Burdette said.

For a while, the two fuels will be sold parallel across the country. But, not all diesel suppliers have the tankage and pumps to sell two separate products.

"It's going to be a little bit of a mess," Burdette said.

With the introduction of more plants, biodiesel, made mainly from soybeans, is expected to provide some price relief from traditional diesel fuel.

In the U.S., there are 60 plants that are expected to produce 150 million gallons of biodiesel in 2006. That is up sharply from 75 million gallons in 2005.

Joe Jobe, National Biodiesel Board spokesman, said that biodiesel supply is surging higher with numerous plants coming online.

"We have over 40 more plants under construction and another 40 in the pre-construction phase," Jobe said. "Plus, Iowa just passed a bill that gives a tax incentive for diesel suppliers to sell a 2% biodiesel blend. We hope to see more states encourage the use of biodiesel."