A serious global economic downturn would cause oil prices to plunge but it’s not the only scenario under which fuel expenses may decrease, experts say.

Oil prices would also drop if the Ukrainian conflict is resolved, or if federal energy regulations are relaxed, though those possibilities hardly appear imminent, experts say.

If oil prices do fall due to an economic slump, which some economists fear is looming, the impacts on farm profits would be unpredictable and likely vary by crop sector.

“At the end of the day, I don’t think a recession is going to help anybody,” said Nolan Schrock, energy division manager at the Pratum Co-op, an Oregon-based farm supplier. “I don’t think a recession is something to hope for.”

Low inventories may prevent wheat and other commodity crop prices from decreasing as steeply as fuel prices, he said.

However, a recession would severely impact crops that are highly dependent on the consumer market, such as the grass seed that’s ubiquitous in Oregon’s Willamette Valley, Schrock said.

“It’s probably going to hurt them more,” he said.

The price of delivered diesel for on-farm use has shot up from roughly $2.25 per gallon to $4.35 per gallon in the past year, demonstrating the value of investing in long-term contracts when prices are low, Schrock said.

“It’s not a bad risk management tool,” he said.

Oil prices had been rising before Russia’s invasion of Ukraine but that war caused a further spike in the costs of fuel and fertilizer, experts say. Demand for both crops and farm inputs surged as the global economy rebounded with the easing of pandemic-related restrictions.

The price of oil would be easy to predict if an analyst could foresee geopolitical events, but of course that’s impossible, said Jim Williams, president of WTRG Economics, which analyzes energy markets.

Russian oil production has declined due to widespread economic sanctions, since roughly half that country’s output is exported, Williams said. “Why produce it if nobody is going to buy it?”

Shipping companies are reluctant to transport Russian oil to countries that haven’t imposed sanctions, since they may change their mind at any point, he said. “If I take that Russian crude, will I be able to unload it someplace?”

Though geopolitical turmoil is unpredictable, Williams said it doesn’t seem likely that Russia will suddenly end hostilities — and even if it did, economic sanctions may not be lifted immediately.

“It’s been a very expensive war for Russia but I don’t see it stopping,” he said.

More restrictive federal energy policies have also driven up the price of oil and refined fuels, though opinions among experts vary as to the degree of impact.

Williams said the price hike was initially caused by stronger demand from the economic recovery and then aggravated by Russia’s invasion of Ukraine.

The Biden administration’s “slow-walking” of domestic drilling permits has also inflated prices, though only moderately compared to the other factors, he said.

“They’ve increased the regulation. The boxes you have to check to drill a well,” Williams said.

The Biden administration has been reluctant to loosen drilling restrictions because reducing the U.S. economy’s reliance on oil is meant to cut carbon emissions and fight climate change, he said.

“It’s certainly a longer-term goal of the Democrat Party,” Williams said.

However, those restrictions have been mitigated by ramped-up oil releases from the U.S. strategic petroleum reserve, which are expected to continue for another half-year, he said.

“That will be the biggest drawdown in history,” Williams said.

Henry Kornegay, principal broker at Jackson Commodities, said the Biden administration could substantially relieve oil prices by approving the Keystone XL Pipeline that it blocked last year.

That pipeline would not only deliver oil more efficiently from Canada to refineries in Texas, but it would encourage more domestic drilling along the route, Kornegay said.

“What’s the point of drilling if you can’t do anything with it?” he said.