Domestic oil drilling isn’t stopping the annual summer gas price hike

Here's an interesting article from Minnesota Cornerstone about rising gas prices despite record levels of domestic oil drilling:

As we drill for more oil than ever before in the United States, gas prices are going up.

Yes, it’s that time of year again. The snow is melting, temperatures are rising, families are making summer vacation plans, people are driving more, and (conveniently) gas prices are spiking.

“Hold on a minute,” you might be saying. “We’re in the midst of a domestic oil boom. I thought that was supposed to lower gas prices?”

Despite messages you might hear from Big Oil companies (often delivered through their friends in Washington D.C. and the media), increased domestic drilling will not save you money at the pump.

According to this story from the Wall St. Journal, U.S. gasoline stockpiles are at their lowest for this time of year since 2011, which is driving up prices. Why are gas stockpiles low and prices up if we’re drilling for more oil here at home?

Because oil companies are exporting gas to other countries, creating a shortage in the U.S. and driving up prices again. From the Wall St. Journal story:

 …the retail price for a gallon of regular gasoline averaged $3.68 on Monday, up 4.2% from a year ago, according to the EIA. That is the highest price since March 2013. AAA had the average price on Monday at $3.67…Total petroleum exports, mostly gasoline and diesel, averaged about 3.6 million barrels a day last week, according to the EIA, up 25% from the same period last year.

So instead of delivering on the promise of lower gas prices with increased domestic drilling, Big Oil is just exporting more gas and once again inflating gas prices as families prepare to hit the road for a summer getaway.

It would have been nice if the Wall St. Journal provided some information and context in the story about the role homegrown ethanol and biofuels play in cutting prices at the pump. Or how now is not the time to slash the Renewable Fuel Standard and reduce the amount of ethanol blended in American gasoline.

Unfortunately, the Wall St. Journal is notorious for it’s blind hatred of ethanol, and is one of the main publications Big Oil counts on to spread misinformation and parrot talking points about American farmers and biofuels.

If you’re looking to save a few bucks at the pump on your family vacation this summer, fill up with higher blends of ethanol. There is a promotion in West Central Minnesota that prices E85 (a blend of 85 percent ethanol and 15 percent gasoline) at least $1 less than gasoline. Higher blends like E15 and E30 are now available in the Twin Cities.

You can get more details on where to buy higher ethanol blends in Minnesota at the American Lung Association of Minnesota’s Clean Air Choice page.

Farmland values in Renville and Kandiyohi County are March-ing upward!

I know we're into April now, but I read an article last month about how farmland values are still March-ing upward, though the market seems to be slowing down.

In an excellent article in the West Central Tribune by Tom Cherveny, he details the significant rise in farmland values over time in our region, including Kandiyohi, Renville, Yellow Medicine, Chippewa, Swift, and Lac qui Parle counties.

The full article is here: http://www.wctrib.com/content/farmland-values-continue-upward-some-signs-cooling-market

Farmland values continue upward but some signs of cooling market

By Tom Cherveny

 

"The value of tillable farmland continues to rise in the region, although some county assessors are seeing signs suggesting that the market may be ready to cool down.

 

Recently distributed property tax notices have already informed most landowners that values are up once again, continuing a trend that took off in earnest in 2008. The assessed value for 2014 on tillable land rose by approximately 10 percent or more in most area counties, including Renville County, which typically sets the pace.

 

Renville County saw its largest increase in 2013, when the per-acre value of tillable land ranged from $4,822 to $10,014, according to information from County Assessor Barb Trochlil. The 2014 assessment range is $5,140 to $14,190 per acre. There were 67 sales evaluated, indicative of a strong market. The assessments are based on sales from October 2012 to Sept. 30, 2013.

 

Other counties in the area have yet to crack the $10,000-per-acre mark, but they are coming close. Assessor Val Skor, Kandiyohi County, reported that the county’s 2014 tillable land values range from $3,354 to just over $9,000 an acre.

 

Land values to the west are not as high. It is also where some of the first indications of a possible change in the ag market are coming, according to Connie Erickson, Yellow Medicine County assessor. She spoke recently about the changes at a program with former state demographer Tom Gillaspy.

 

Erickson pointed out that since October, her office has seen several land auctions where no sales occurred because the sellers were not offered the prices they anticipated. She also noted that agricultural land values rose by 255 percent in the last six years, including a 36 percent jump in 2013. This last year’s increase was only 10 percent.

 

Assessor Bonnie Crosby, of Chippewa County, said sales records also seem to suggest that values are not rising as rapidly as in prior years. Nonetheless, other counties continue to see steady and relatively large increases. In Lac qui Parle County, land values rose 20 percent in the latest assessment, with a range for 2014 of $4,131 to $7,489, according to Assessor Lori Schwendemann.

 

Swift County is seeing steady jumps as well. From 2013 to 2014, the average for tillable acres rose from $4,420 to $5,730 per acre, reported Wayne Knutson, county assessor. Swift County saw 39 sales for 5,378 acres in the time period evaluated for 2013 assessments. In the period for the current 2014 assessments, it saw 29 sales for 2,540 acres.

 

Swift County has seen more activity than would be expected due to the Minnesota Farm Company. It owns several thousand acres in the western part of the county, and has been marketing the properties. The company’s land sales have greatly complicated the task of assessing values in the county. Knutson said there have been surprising variations in the prices at which land sold in recent sales.

No matter the variations in values per acre, all of the counties in the area have seen major increases in farmland values since 2008, while residential and commercial/industrial property values have remained largely unchanged.

 

The result is a major increase in the tax capacity of the counties, along with a shift of the overall burden to agriculture. Erickson reported that in Yellow Medicine County, the tax base has risen from $1.4 billion to $3.2 billion, with agriculture representing $2.8 billion of the total. Swift County added nearly $500 million in value last year alone due to the rising value of farmland, noted Knutson."

 

If you have any questions about selling your farmland, please contact me at 320-894-7528 or noah@farmlandman.com. I would be happy to help you out!

 

Sincerely,

 

Noah Hultgren

noah@farmlandman.com

320-894-7528