Fuel prices have been inching higher in recent weeks – much earlier than the usual spring run-up due to the switch-over to summer-grade fuels. Here are some clues as to why and what's ahead for farm fuel.

Last week, the U.S. Energy Department's Energy Information Administration released its most recent fuel price projections for 2012. Nationwide, over-the-road diesel fuel plus taxes are expected to range from $3.91 to $3.99 per gallon. Farm diesel prices tend to run lower due to fuel tax exemptions, except in California.

EIA also projects 2012 retail gasoline to average $3.55 a gallon nationwide. Regional averages are pegged at: $3.40 a gallon for the Gulf Coast; $3.50 for the Midwest; $3.55 for the East Coast; an $3.80 for the West Coast.

The assumptions for gasoline include a market run-up into June, due to the switch-over to summer grade fuel. During the April through September peak driving season each year, prices are forecast to average about 7 cents per gallon higher than the annual average.

Recent options and futures price data imply that the market believes that there is about a one-in-four chance that the U.S. average retail pump price of regular gasoline could exceed $4 in June of this year. While farm fuel prices tend to run lower than retail, they follow a similar pattern.

But speculative action by money managers is growing in light of recent petroleum industry announcements to idle several refineries serving the Atlantic basin (three on the U.S. East Coast and two in the Caribbean). Those changes could push diesel and gasoline prices higher, according to Tom Kloza, chief oil analyst for the Oil Price Information Service.

Refinery shut-downs to impact fuel logistics

With some refineries shut down and a higher reliance on imported gasoline, significant logistics changes for the U.S. East Coast fuel deliveries and sourcing are in the cards, according to OPIS.

Jacksonville, Florida, could be the most impacted city on the East Coast, as it would need to rely on more gasoline imports from Europe, Canada and India rather than mainly from Gulf and Caribbean refineries. Over time, the East Coast gasoline markets will base values on New York Harbor imports from Europe.

New York Harbor cash gasoline prices are typically several cents per gallon higher than Gulf Coast. But recently, that price gap has been relatively narrower than normal for this time of the year due to surging Gulf Coast values and sagging New York prices.

Fuel market traders expect more gasoline imports from Europe through New York Harbor and from Canada this year. Since Jacksonville has at least 12 rack distributors, including Valero, Shell, Chevron, BP, Sunoco, Citgo, Colonial, Hess, Marathon, Apex, Flint Hills and ExxonMobil, a huge switch in fuel supply logistics will be required..

In recent weeks according to OPIS, Hess and Citgo were seen buying gasoline spot cargoes for late-January and February from the Come-By-Chance refinery in Canada and the Pembroke facility in the past few weeks.

Meanwhile, the Hovensa (Gulf Coast refiner) shut-down should keep the upward pressure on rising Jones Act shipping rates for delivering products from the Gulf Coast to the Southeast. The Jones Act requires all shippers along the U.S. coastline to use only U.S.-built ships and U.S. crew.

Bottom line: Farm fuel prices are likely to become more volatile than normal this summer. So filling those tanks early and often may be the best buying advice.