The overall impact of oil prices on pellet prices will be far smaller than the price impact on oil prices....The percentage of increase directly related to the price of oil is far less of an impact on the user of oil in production than for a user of oil (as the end user).
The price of pellets in the State of Maine appears to be headed in the right direction currently (stable or possible decreases due to competion) and that has the largest impact on my family. With a resource that is locally produced, I feel far more comfortable than the thought of relying on oil extracted around the world maintaining a constant (yet extremely high) price. I am not removing my current oil boiler, just putting it in a state of suspended animation for the near future.
The winter will come and I will have heat for my family as long as I have a small amount of electricity to circulate the water from the boiler and maintain the feed supply. I need a total of 300watts more for my pellet boiler than for my oil heat...a fair trade for the cost of the BTU’s produced.
Sorry, Pellet Owner, having been in the HVAC business including the design and importation of equipment from Europe, Canada and elsewhere.....you are entitled to your opinion, but to say that ANY pellet boiler is more reliable than an oil burner is misleading. Very misleading. When you show me MILLIONS of automated pellet boilers in the field over a couple decades, then you will have a leg to stand on. Until then, you have your opinion.
As to Pellet pricing....same deal. You and I have no idea if there will all of a sudden be a world demand for US Paper (due to cheap dollar), or wood for building materials, furniture, etc.
Being as we have seen the price of pellets range fro $150 a ton to $375 a ton in the last 24 months, it is very hard to even guess what the future price will be. I certainly hope they stay low and stable. But I would not bet on it!
And that is just the point. If my mother lived in Maine and had to go borrow money to spend 13K on a Pellet boiler so that she could save $1200 a year, I would go a lot of research before telling her to do so. Would 13K spent in new insulation, windows and other systems save her as much or more? Would a low cost switch to LP (which is cheaper than oil now in most places) save her something? Any capital purchase of that size requires more than the “fear factor” in my opinion.
I applaud the fact that more and more biomass boilers and furnaces will be available soon. However, those entering this market from the sales or importing end should have a long term plan for making market penetration (and money) and sometimes the WORST thing that can happen is a bunch of people jumping into things before the entire situation ( service, parts, fuel supplies, reliability, etc.) is worked out.
You create this wonderful blog devoted to wood burning, expand it to include pellets and presumably all things biomass, and then predict future pricing of pellets is likely to rise faster than oil (which you predict will decline after this bubble is over), and recommend that people convert to LP rather than biomass systems? You’ve got me very confused about your intentions.
Your pellet angst seems primarily directed towards the Maine Energy Systems (MeSys) attempt to do boilers in Maine in a big way. Is it simply the size of this venture that has you apprehensive? There has been much discussion about the price tag being $12,000 or more. MeSys chose to advertise what they feel to be a relatively conservative INSTALLED cost and now everyone says their system is way overpriced. Well, as I stated earlier in this thread the boiler equipment cost is just over $8,000 and a few people have pointed out a couple of other pellet boiler units priced under $7,000 - so can we agree that the cost of the MeSys equipment is not out of line with other pellet boiler options?
Your next biggest concern seems to be new foreign (european) equipment and no one to stand behind it - you say you would prefer the independant route. However, you seem to have a preference for the european boilers - just not the Bosch/Janfire unit from MeSys - so that leaves you with Tarm as the one proven commodity with a track record (and it costs $11k for the equipment). Or you can look at other “independent” european units that are coming to America in lots of 5 on ships every couple months and you have to buy it from the one dealer in “your region” that happens to be 500 miles away. MeSys wants/plans to install thousands of systems and will need a large number of local trained service and install technicians. So perhaps you being in the HVAC business will be fine tinkering with your independant unit when it goes on the fritz but I don’t think other less skilled homeowners would benefit from that approach.
If you and your mother in Maine decide that a 10 year ROI is too long, that is fine by me - that is up to the individual. If going to pellets will only save her $1200/year, were you serious when you suggested her return on investment would be better if she invested in better insulation for her house? I think that is a pretty misleading suggestion.
So I keep asking myself, why is he so opposed to pellet boilers (or at least the MeSys boiler plan)? You start a blog presumably to educate people to biomass heating, Les Otten comes along with a visionary idea to try and open up this option to a much larger group of people and you oppose his idea. I just don’t understand??
Uh, my intentions are always very clear. I work for the customer!
I hope everyone make a million bucks...in one day if possible.....but not at the expense of someone who cannot afford it!
No doubt there needs to be early adopters. I don’t know who MeSysor or anyone else is....just speaking from experience and math.
What you may be surprised at is that I am not a pimp for the industry and manufacturers. I lived through the first pellet boom and saw tens of thousands of customers fork over hard earned money for stoves that were defective and not stood behind. What do you have to say about that?
In the end, I actually DO pimp for the industry and manufacturers since if they took the long term (and quality) view, it would benefit the entire market - makers, retailers and end users. I certainly applaud any efforts by business and government to further the use of clean biomass. But when folks start making statements about better reliability than oil, two year paybacks and stable prices for pellets (given the recent history), my BS meter goes up.
A ten year ROI is certainly a long time for most people. You will not replace 10% of boilers in Maine given such a scenario (my opinion, of course). With inflation and interest rates likely to rise, and the credit crunch, the cost for that 10-12K initial investment can be $800 to $1000 a year in interest alone.
In terms of the brand names, I love ‘em all....well, except the idea of throwing pellets and coal into batch fed boilers! Harman are very well known.....but I think anyone who studies the field will see that Euro models have evolved further than most domestic brands and are also subject to more efficiency and “build” standards. That is a good thing. But if the demand is there, it will not take long for the Domestic makers to produce better units.
So, it is all good. I think products should be sold on their honest merits. We have had this discussion here many times before and even some industry insiders have agreed that pellet central heating is a tough ROI expect in those homes which use a LOT of heat. There are many other reasons to go biomass...of course. Local availability, renewable, etc.
In summary, I am certainly not saying that folks should not buy a biomass boiler! BUT, if a person is doing so for the savings of $$ as the primary reason, the purchase will take some research to assure that- without rose colored glasses - that the payback will be there.
Noticed that some of the advertisers at the bottom of the page are software used specifically in Oil Futures trading.....?? I also notice that the ads are balanced by sites used for purchasing pellets, stoves, etc.
Futures trading is the one specific thing that has been responsible for the dramatic upswing in the per barrel price for oil. More than production, more than problems in the Middle East more than any other factor. I understand the desire to make money in the market but the individual trader in oil futures should understand they are a part of the oil price problem and should at least understand the rammifications of bidding up the prices by dumping their money into the market.
On the other side of the coin, I am really enjoying the lively banter of the other “posters” on this site freely supplying people such as myself with years of information gleaned from hands-on experience in the bio-mass heating scene. I am going to be installing a pellet boiler (or boiler stove) in parallel with my current oil boiler to even out some of the spikes in the price of heating. Based on the posts to this site, I have narrowed my search and learned a few of the possible pitfalls of pellets but now feel much more confident of my decision to buy an “alternative” heat source in these uncertain times.
Most ads on the forum are placed there automatically by google. Our discussions have probably put the proper keywords in, so those ads show up....heck, they probably pay well. I get a % of the revenue from the ads (only when you click on them).
Oil is down almost $8 since we started this conversation. Just a blip? Maybe......but when everyone is crowing (and then betting) that oil is gonna get cheaper, people stop speculating as much. If Heating oil goes down to $3.00 (not likely, but possible), I’d certainly tell people to lock in and stock up.
Glad you learned something. I understand that we tend to play devils advocate, but that is a side of the equation that is good to consider.....and you are unlikely to hear it from sales folks. Good luck in your quest and let us know which unit you come up with. Hopefully, cheaper oil will be tagged along with a stronger dollar and Euro equipment may come down in price! It used to be that the imported stuff was the same price or less than the domestic brands.
Fuel oil delivery as of today is $4.399 per gal. here in western Ma. (Pittsfield) and that`s the lowest price available. The high is $4.68 per gal.
Crude might be down $8 but we might not ever see it .
I`m actually thinking of another stove and chimney on the main floor to nearly eliminate the oil I buy.
And I can forsee the possibility of not heating the finished basement in the future and getting by with a pellet stove on the main floor. I could live with that if I have to.
Maybe even restore some of the (former) electric heat in rooms that would need minimal or occasional heat.
Only have to move my computer upstairs .
Drastic times call for drastic measures. Heh, heh , heh.
Really now, As a youngster (1950s) I can recall having to cut firewood in the summer to burn in the coal furnace in the late fall before it got cold enough to burn coal safely and efficiently and never having much if any heat in the bedrooms all winter. Still that old coal furnace in the cellar was a luxury back then.
But I can go back even further to the 40s to our other home and recall our weekly baths in front of the old kitchen cook stove, wood, coal , oil ? Can`t remember what combination it was but it had a side heater of some sort in it. We also had an kerosene stove (vented space heater) in the living room. I can recall the white kerosene cans placed upside down behind the stove
glug,glug,glugging periodically as it slowly fed into the pot burner that needed it`s dual wicks trimmed occasionally. There was a 50 gal oil/kerosene drum outside near the porch door setting atop a pair of cross bucks and I assume it was filled on a regular basis. Let`s see now, 50 gals at maybe .10 per gal or less was possible because I do remember oil at .14 a gal in the mid to late 50s.
There was no heat in the bedrooms for sure but I never remember being cold however I remember like it was yesterday having my fathers WWI long woolen brown Army coat on top of me to keep me warm. How I loved that old coat. How I loved my father. It had my fathers smell to it or at least I imagined it.
It seems some of us might be destined to return to the old space heater scenario and maybe that`s not a bad thing either since we have become far too accustomed to the excesses and waste of the modern lives we live.
John
Fuel oil delivery as of today is $4.399 per gal. here in western Ma. (Pittsfield) and that`s the lowest price available.
Crude might be down $8 but we probably won`t see it .
I`m actually thinking of another stove and chimney on the main floor to nearly eliminate the oil I buy.
And I can forsee the possibility of not heating the finished basement in the future and getting by with a pellet stove on the main floor. I could live with that if I have to.
Maybe even restore some of the (former) electric heat in rooms that would need minimal or occasional heat.
Only have to move my computer upstairs .
Drastic times call for drastic measures. Heh, heh , heh.
Really now, As a youngster (1950s) I can recall having to cut firewood in the summer to burn in the coal furnace in the late fall before it got cold enough to burn coal safely and efficiently and never having much if any heat in the bedrooms all winter. Still that old coal furnace in the cellar was a luxury back then.
But I can go back even further to the 40s to our other home and recall our weekly baths in front of the old kitchen cook stove, wood, coal , oil ? Can`t remember what combination it was but it had a side heater of some sort in it. We also had an kerosene stove (vented space heater) in the living room. I can recall the white kerosene cans placed upside down behind the stove
glug,glug,glugging periodically as it slowly fed into the pot burner that needed it`s dual wicks trimmed occasionally. There was a 50 gal oil/kerosene drum outside near the porch door setting atop a pair of cross bucks and I assume it was filled on a regular basis. Let`s see now, 50 gals at maybe .10 per gal or less was possible because I do remember oil at .14 a gal in the mid to late 50s.
There was no heat in the bedrooms for sure but I never remember being cold however I remember like it was yesterday having my fathers WWI long woolen brown Army coat on top of me to keep me warm. How I loved that old coat. How I loved my father. It had my fathers smell to it or at least I imagined it.
It seems some of us might be destined to return to the old space heater scenario and maybe that`s not a bad thing either since we have become far too accustomed to the excesses and waste of the modern lives we live.
John
I am waiting on the details from the tech rep for 3 seperate models of boiler stoves to let me know the specifics on running in the US (60 Hz rather than 50Hz). The models are the ECOTHERM H2O 34 (34 Kw total 15% to room and 85% to the water - cost 7100 to get here but it is great to look at in our living room and would add more than my maximum heat load to my existing setup), the Artel 14 Boiler stove (14 Kw 5% to the room and 95% to the water but if I add storage it should supply nearly all my heating needs with the exception of the coldest days below Zero F), the last one is actually a series, MCZ makes several models of Pellet boiler stoves which could meet my needs as well.
The Artel rep just responded, it will operate fine on 60Hz and the total cost of getting the stove here is $7094.60 - a lot of money but it vents through the wall, is located in living space and would meet my heat and hot water needs for 350 days per year. I need to get a bit more info on the other stoves before I jump.
My take on pellet pricing is that it wont be too far from other heating sources.
People need to rethink carefully if they think they will save thousands a year by switching to pellets.
I understand the benefits of switching to pellets if not for anything else let it be because you are buying a local product and thus helping the wood insustry that needs to be revitalized and this could be a big boost to the industry.
Nonetheless humans are greedy and pellets will not stay cheaper for very long especially if the the demand increases.
These pellet boilers are a great idea, especially if they can replace easily old oil/gas furnaces. The only drawback is the space needed for the fuel.
I just wish that pellet prices would remain stable and low, heck if necessary have the governement subsidize this heating source.
IMO pellet burning should be a priority for the government when you look at all the benefits of it.
Clean energy, renewable energy (environment), local industry/jobs (more taxes), easy maintenance, easy and safe to transport (imagine a tank full of oil/gas has an accident and the tank ruptures?), you get that wood heating feeling, and doesnt have to be expensive.
Its a win win situation for everybody… unfortunatly greed will settle in sooner or later.
Btw those trucks are a great idea, hopefully the idea will expand all over the place.
In the end dont count on pellets stying cheap… it wont happen.
My take on pellet pricing is that it wont be too far from other heating sources.
People need to rethink carefully if they think they will save thousands a year by switching to pellets.
I understand the benefits of switching to pellets if not for anything else let it be because you are buying a local product and thus helping the wood insustry that needs to be revitalized and this could be a big boost to the industry.
Nonetheless humans are greedy and pellets will not stay cheaper for very long especially if the the demand increases.
These pellet boilers are a great idea, especially if they can replace easily old oil/gas furnaces. The only drawback is the space needed for the fuel.
I just wish that pellet prices would remain stable and low, heck if necessary have the governement subsidize this heating source.
IMO pellet burning should be a priority for the government when you look at all the benefits of it.
To make the change in price needed for the price of pellets and oil comparable is over $500/ton. The highest prices I have seen in Maine (prior to the opening of three new pellet mills in the past 6 months) is $260/ton. The actual price in Maine has dropped to around $225/ton (many suppliers are expecting prices to remain the same or slightly increase during the heating season coming up). Oil prices are not going to drop to $2.20/gallon to equal the price comparison to current pellet prices of $250/ton (New England Average).
There is no world futures market with nearly 280 Billion gambled on future prices of oil. Oil futures trading has an average of over 25 Billion a month in increased influx for the past 6 months. The price for oil will fluctuate in a range but will not likely drop unless the US/Europe/Asia finds a major source of oil which has gone undiscovered. Don’t look for an incredible increase in pellet prices either as the inventory of standing trees in the US has never been higher (even during Colonial days). The new pellet mills are able to make quality pellets from wood that has little of no value for building material, pulp production or most other uses. They can also utilize the excess wood production in areas of the country where the paper industry has dropped due to increased costs and re-cycling.
The speed of payback (which may flucuate slightly) is slightly variable but most homeowners (who choose to change to or suppliment with pellet heat) will have a very qucik return on investment (2-6 years). The local pre-buy price of #2 oil this morning in the Bangor, Maine are is $4.67.9/Gallon - minimum purchase is 1000 gallons. Lat year I pre-bought for $1.79.9/Gallon. My payback period for my 1600 gallons ($43/million BTUs oil to $16/million BTUs pellet) will be fast when I replace them with pellets and a pellet boiler.
One interesting thing about the Human condition is that we ALWAYS seem to forget quickly.......when it is convenient for our point of view.
Less than 2 years ago, Pellets were $300+ (and hard to get) and Heating oil was $2.50 a gallon. If we debated this EXACT point at that time, what would the calculations have been? It is JUST AS SILLY to use current pricing to do so......
We can always come up with “reasons”, but having heard them since 1972-4 (first oil crisis) and then buying fuel oil at 69 cents a gallon ten years later, I would ask for a more compelling argument.
Rather than outright say “it pays to switch”, it might be best just to give the figures based on a range of prices for both fuels and include the financing, interest, maintenance, etc......
BTW, all the same reasons above (about why pellets would be cheap) were given to me in 1994 when we first started selling Pellet stoves. We were told there would be endless supplies at cheap prices in the years ahead.
The only REAL way to calculate payback is looking back after a number of years.
It would be difficult to say the “same reasons...were given” to you in 1994 would not be applicable as the new-style pellet making process was 1st used in the United States in 2001. Prior to that time over 90% of the pellets manufactured in the US were from scrap wood or sawdust. The new pellet mills are capable of usig every bit of a tree not just selected parts which had the appropriate moisture content and were the right size and shape.
I realize that figuring a payback period is best accomplished in hind-sight, it would be foolish to do nothing at this point in time. If you believe the price of oil will be low enough to recommend to the readers of this website to do nothing, please do but I am doing all I can to protect my financial resources and the well being of my family.
Winter will come and everyone in the Northeast will require heat and hot water! You indicate it would be “JUST AS SILLY to use current pricing to do so......” (to figure heating costs for this year), do you suggest using historical prices such as those you indicate ($.69/gallon). I wish you well and I will no longer contribute to this forum as it seem you (as the Moderator) are more interested in telling people to do nothing rahter that be educated and make plans to ensure their family’s health and well being this winter.
Uh, perhaps you have so strong a point of view that you didn’t read this part of my post:
“Rather than outright say “it pays to switch”, it might be best just to give the figures based on a range of prices for both fuels and include the financing, interest, maintenance, etc......”
That is called education. Your tack is called fear. It is best not to operate out of fear - because that is the same emotion that would tell me to buy the biggest hummer I can find so I protect by brood when I am driving around.
We pursue all sides of subjects here. What is good for you may not be good for someone else. If that offends your sensibilities, that is really not the intent, but we certainly are not going to change our 12+ years of educating the public based on your fear for your survival next winter.
I too believe that oil prices are artificially high and will not stay this way very long.
With this said, dont fool yourselves thinking that pellet prices will remain at the same price as they are right now.
If oil prices stay this high, you can expect gas/propane/pellets/wood to follow the same trail.
im in the pellet business and im locked on to my ton price but the only thing that may go up is the trucking.
Do you mean for the year?
Southwest Airlines has bought 70% of their jet fuel at about 2.50 a gallon for this year.......but next year is another matter.
As the old saying goes “the further the squirrel goes out on the branch, the shakier it gets”....
But looking at the last 4 years, we have seen:
Oil prices from $2.25 to $4.50 (approx)
Pellet prices from $200 to $350 (delivered, approx)
Maine Energy has a fairly accurate calculator on their site, so they are not trying to fool anyone. I would hope, only, that people actually use it and set the different variables up and down to see what happens when one fuel gets cheaper and another more expensive.
http://www.maineenergysystems.com/savings_calculator.htm
I immediately set the term to 10 years instead of 20, figuring that it is the rare bird that wants to figure out savings that far in the future...people generally move, etc.
Then I took 1000 gallons of oil and 250 pellets and $3.75 oil (just for guesswork).
That provides a savings of $126 a year, not enough to make me salivate. The truth of the matter is that most of the savings go one place - INTEREST on the financing. As they say, pay now or pay later!
That provides a savings of $126 a year, not enough to make me salivate. The truth of the matter is that most of the savings go one place - INTEREST on the financing. As they say, pay now or pay later!
Unfortunately I agree with you.
Alot of people will be fooled this year thinking that they will be saving alot of money by switching from Oil/gas to another source and the truth is that either oil price cannot stay this high or pellets will increase in price considerably (which is what I am afraid of). :(
People do your research carefully and do not assume that the price will stay this apart for very long…
Also, when your relatively unreliable oil burner breaks, you have a heating solution that can keep you warm for months instead of hours.
The price of pellets will be stable for several years. MEsys has a relatively large amount of money, and I’m sure they have a contract for their entire projected winter fuel needs. Also, I heard that someone was purchasing multiple pellet mills at the Hearth, Patio, and Barbecue Expo, so I wouldn’t worry too much about the stability of pellet prices. Europe has plenty of pellet production, it’s just cheaper over here due to the difference between the dollar and the euro. Maine’s forest industry is doing terribly right now, and a chance to let them run their machines and actually turn a profit will drive an increase in production capacity.
From what I hear, half a year (4 ton delivery) of fuel is going to cost about a grand, meaning a 2k (plus or minus $100) total cost for your winter’s fuel.
Relatively unreliable oil burner? What makes you think a pellet furnace is going to be reliable ?
And what crystal ball are you viewing that makes you not think the price of pellets are stable?
John
If your pellet burning system is automated, then yes, it’s much more reliable than oil heat. If you have a cheap $3k pellet burner/boiler that you have to refill with 40lb bags, then no, you’ll have to clean it, scrape it, remove the ashes, and lug around your pellets, and it will only be as reliable as you are.
Maine and the surrounding area has a flagging timber business that’s just waiting for some demand. Multiple pellet mills have been purchased in the area, and pre-existing domestic pellet production is so high they have to export it anyway. With several pellet mills coming online that will dramatically increase pellet production in the area (think 2x or 3x the pellet production capacity we have now) and flat pellet demand the price of pellets should either plummet or stabilize (in a perfect free market )
Now, if Germany, Norway, Austria, and Sweden suddenly found themselves without any trees, we might see a spike in pellet prices. As it stands, they’re importing from the US because the dollar sucks, not because they can’t make them over there.
Edit:
As to your corn comparison, corn is something that is not only being used for fuel, food, feed, and furniture, but is also something that must be produced in a field. You have to water it, tend it, fertilize it, keep it safe from pests, and harvest it. Corn does not occur naturally in thousands and thousands of hectares across North America. Trees are much easier to maintain than corn. Corn prices spiked because there is much less unused market capacity, whereas the timber industry is not doing as well as it could and there is plenty of out-of-work labor in foresting towns.
It doesn’t matter if every square inch of unused land in the USA is forested.
It doesn’t matter if there is a pellet plant in every town.
And it doesn’t matter if everybody and there brother is a logger.
I have 3 pellet mills within 80 miles of me and not one of them is willing to pay enough $ for me to ship them product from my mill or logging jobs (if I wasn’t already shut down). For anyone to invest the kind of money it takes to start an operation to supply pellet mills your looking at a 1-2 million dollar investment. At $30/ton it isn’t going to happen. Tons of loggers and timberland here but NO ONE is going to log for $30/ton and NO landowner is going to sell at current stumpage
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