If oil is going down....why aren't pellets?

I think it will take a couple weeks - because the mills and dealers already have orders at higher prices - plus they imported pellets from the west coast, etc. which cost them a lot more. These have to move though the system before any prices can come down.

As long as there are people out there buying them for $300, they will probably sell for that!

Webmaster said:

I think it will take a couple weeks - because the mills and dealers already have orders at higher prices - plus they imported pellets from the west coast, etc. which cost them a lot more. These have to move though the system before any prices can come down.

As long as there are people out there buying them for $300, they will probably sell for that!

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i second this, why would you lower prices when people will pay the inflated prices?

inmho, the drop in oil prices is a fluke, trap, whatever you would like to call it.the oil companies are running scare because they havent been selling and getting thick pockets.fill your tanks and use it for backup...the prices will only stay down for a while then they will jack the crap out of them again.


mike

Problem is diesel $ is not coming down....

mjbrown65 said:

inmho, the drop in oil prices is a fluke, trap, whatever you would like to call it.the oil companies are running scare because they havent been selling and getting thick pockets.fill your tanks and use it for backup...the prices will only stay down for a while then they will jack the crap out of them again.


mike

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Yup......I will stock up on oil....use for HW.....

The reason being is,
1. MANY mills have been dismantled in the last 5 years and especially this last year. Mill infrastructure is GONE. I closed the doors on our mill last Jan. and sold it due to inability to turn a profit.
2. Mills that are left are mothballed or running 2 or 3 days a week. I know of 2 mills within 15 miles of my place that had the electric co. come and pull their meter. This is a "guilotine" move on the part of a mill considering the reinstall and inspection costs.
3. Like oil refineries new mills are not being built.
4. Contract Loggers that can produce pulp for pellet mills (very few are left) are being paid 2x (in my area) what they were just a few years ago. Commanding top dollar for their services as well as the haulers delivering product.Adding to consumer costs.

These reasons along with a plethora of others are going to keep pellet prices high. The supply of raw material is no where to be had and demand is high. Unless the new housing market kicks into high gear pellet prices will remaim high. I personally don't see a robust housing market for at least 10 years.
Lower prices will depend on the development of alternative feedstocks for pellet production.
Also remember that cellulosic ethanol and biomass fueled power plants are in the near future which will demand the same type feedstock that pellet mills require.
The biomass industry has a very interesting and profitable future.

I see many bio projects being put on hold as oil will be cheaper for the time being for a least a year or two. The cost of producing bio fuels will cost more than oil so there will be no point or profit potential to go ahead with such projects until prices on oil go back up. I see pellet plants making up for the lack of saw dust by buying new equipment to process whole tree logs or wood chips into pellets. Suppliers will eventually have to cut prices to compete or sink at both ends for the next few years. Pellet prices will come down, later this winter but the selling of pellet stoves will continue as people would not like to be caught with there pants down again. But this is only a short term, oil will go back up again as supplies are becoming to be finite, oil producing countries will hold back more oil from export to fuel their economic growth. Even with the transition of SUV to more efficient cars, oil supplies will not keep up with population growth, short term oil will be cheaper, long term the price will be much higher.

However if pellet production does expand in a short time to keep America warm, the prospects of cellos ethanol and bio oil looks grim, I don't think there is enough wood to go around and other forms of raw material like switch grass will have to be grown probably taking longer to reach the market there for energy is not going to be cheap for the next 10 to 20 years. Best to start thinking solar..............

There is always lag time for everything. Oil isn't the only cost. Labor, transportation, electricity, ect. all play into it. Don't assume the dealer is gouging you. We generally make less than $25 per ton even though the price goes up the dealer isn't getting rich on it.

strangemainer said:

With oil here in southern Maine at 2.48 per gal, its almost cheaper to burn oil. Most places want $295 or more
for a ton of pellets. What gives? Shouldn't they be coming down as well?

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At $2.48 a gallon I wouldn`t burn pellets.

Crude is $69.88 at the moment. Hot Dog!

I have two 330 gal tanks in the basement that are currently full. Topped off a few different times at an average of about $390/gal. I'll be burning my pellets and saving that $4 oil.

richkorn said:

I have two 330 gal tanks in the basement that are currently full. Topped off a few different times at an average of about $390/gal. I'll be burning my pellets and saving that $4 oil.

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A shame really. Fuel oil is now around $3 a gal. Pellets if and when available are at $300 or more a ton.

A shame really. Fuel oil is now around $3 a gal. Pellets if and when available are at $300 or more a ton.

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Yeah, If i could only foresee the future I wouldn't have filled them up at those times and waited. Oh well, I'll conserve the oil and burn the pellets; I like looking at the fire anyway!

The cost to buy saw dust is one of the biggest issues for pellets. The building industry has dropped so companies that were working two shifts a day six days a week are down to a single shift four or five days a week. That is a big drop in saw dust production.

Look at the demand for pellet stoves and this causes more demand for pellets.

Eric

richkorn said:

I have two 330 gal tanks in the basement that are currently full. Topped off a few different times at an average of about $390/gal. I'll be burning my pellets and saving that $4 oil.

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You're not saving $4 oil, you're saving $3 oil since that's what it costs to replace it. The stuff in your tank isn't worth $4 anymore. The difference in what you paid has already disappeared on you.

Since the replacement cost of oil is less than the replacement cost of your pellets, economically you're better off burning the oil and saving the pellets. Situation may change over time but the sunk cost of what you've already bought has nothing to do with which is cheaper to use right now.

(If you had bought the oil at $1/gal would you think you should burn it even though replacing it costs 3 times as much?)

Hoverfly said:

I see many bio projects being put on hold as oil will be cheaper for the time being for a least a year or two. The cost of producing bio fuels will cost more than oil so there will be no point or profit potential to go ahead with such projects until prices on oil go back up. I see pellet plants making up for the lack of saw dust by buying new equipment to process whole tree logs or wood chips into pellets. Suppliers will eventually have to cut prices to compete or sink at both ends for the next few years. Pellet prices will come down, later this winter but the selling of pellet stoves will continue as people would not like to be caught with there pants down again. But this is only a short term, oil will go back up again as supplies are becoming to be finite, oil producing countries will hold back more oil from export to fuel their economic growth. Even with the transition of SUV to more efficient cars, oil supplies will not keep up with population growth, short term oil will be cheaper, long term the price will be much higher.

However if pellet production does expand in a short time to keep America warm, the prospects of cellos ethanol and bio oil looks grim, I don't think there is enough wood to go around and other forms of raw material like switch grass will have to be grown probably taking longer to reach the market there for energy is not going to be cheap for the next 10 to 20 years. Best to start thinking solar..............

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HOVERFLY--fyi

Have you looked at the price of solar????
Expensive is an understatement. If you have to ask how much it costs, you can't afford it --- is closer to the mark!

If You live in a state & qualify for state assistance in building
your photovoltic solar system, only then is it not too expensive.

I'm not qualified to comment on the cost of hot water solar but i do know it is qiute expensive for solar cells systems even if you do all the install & wiring yourself.

a 175 watt pannel runs between $750.oo to $1200.oo & you need at least 4 of them for a small system if not 6.8 , 12
or 24 for a off the grid home like I was looking into & you also need battery storage banks, a wind powered generator
& a backup gasoline generator for when the sun dont shine & the wind dont blow.

You have to manage your electric useage to what your battery bank can supply, so either you limit your electric consumption or buy a second battery bank at $120.oo per battery & usually 4 bateries to the bank.You need deep cycle marine bateries, el cheapo
car bateries ($49.99) hold only 1/3 the charge of a deep cycle
marine & just won't cut it.

A solar system I was looking at cost $30k for parts only & you had to either install yourself or pay extra for installation.

The parts in the $30,000.oo kit can be bought seperately for about 12,000.oo if you know where to get them & how to match them up & pick them out & if you are capable of designing & installing your own system, such as I could if I were severly motivated.

Solar is great, but its not for everyone & just like pellets,I don't see it ever getting any cheaper, only more expensive.

You may be able to buy used solar pannels, but i never seen them anywheres & i been looking, moderately hard for 4 months. I'm begining to think that used solar pannels are either a mith or sell faster than wood pellets in winter during a pellet shortage at a 2.oo a bag discount.

So, best of luck with that.

PS I'm damed glad that my primary heat is secondary burn wood wood stove &
that my pellet stove is just for the nites when I'm too tired to lay the wood & lite the fire & watch it for an hour to be sure the fire settles down.

I sincerely love just pushing the on button & going straight to bed when I am dead beat. Maybe I'll buy some oil instead of pellets.

Even if pellets are slightly more expensive than oil, you have to keep in mind what you have sitting around the house. If you already have a winter's worth of pellets, then it makes sense to burn pellets. You've already outlayed the money. If you switch to oil, you have to buy the oil. This is why I will burn pellets unless and until oil becomes significantly cheaper.

As for next year... this isn't charity. I'll go with my cheapest option. I HOPE it's pellets, but we shall see.

Like myself I am sure that most of you have seen this bait and switch routine performed by the oil companies before. The only reason that oil prices are down is because demand is down due to the slowing, crashing, global economy. Now everyone thinks that the problem is resolved, when in reality the bait is set. If we truely want to start to become energy indipendent then we need to change our short term view and move to a long term one where we keep our $ within the borders and export our products and energy - imagine that!

in-control said:

Like myself I am sure that most of you have seen this bait and switch routine performed by the oil companies before. The only reason that oil prices are down is because demand is down due to the slowing, crashing, global economy. Now everyone thinks that the problem is resolved, when in reality the bait is set. If we truely want to start to become energy indipendent then we need to change our short term view and move to a long term one where we keep our $ within the borders and export our products and energy - imagine that!

Click to expand...

I agree!
Oil Companies and their greed pushed us to buy into an alternative. Breakpoint for us was $4.80/gal!!
OPEC is going to have a meeting......prices will go up.

We are having our first 4 tons delivered today.
Even if pellets and oil are the same price, pellets will be used in our house!
I find it to be a much warmer heat for these old bones

eernest4 said:

HOVERFLY--fyi

Have you looked at the price of solar????
Expensive is an understatement. If you have to ask how much it costs, you can't afford it --- is closer to the mark!

If You live in a state & qualify for state assistance in building
your photovoltic solar system, only then is it not too expensive.

I'm not qualified to comment on the cost of hot water solar but i do know it is qiute expensive for solar cells systems even if you do all the install & wiring yourself.

a 175 watt pannel runs between $750.oo to $1200.oo & you need at least 4 of them for a small system if not 6.8 , 12
or 24 for a off the grid home like I was looking into & you also need battery storage banks, a wind powered generator
& a backup gasoline generator for when the sun dont shine & the wind dont blow.

You have to manage your electric useage to what your battery bank can supply, so either you limit your electric consumption or buy a second battery bank at $120.oo per battery & usually 4 bateries to the bank.You need deep cycle marine bateries, el cheapo
car bateries ($49.99) hold only 1/3 the charge of a deep cycle
marine & just won't cut it.

A solar system I was looking at cost $30k for parts only & you had to either install yourself or pay extra for installation.

The parts in the $30,000.oo kit can be bought seperately for about 12,000.oo if you know where to get them & how to match them up & pick them out & if you are capable of designing & installing your own system, such as I could if I were severly motivated.

Solar is great, but its not for everyone & just like pellets,I don't see it ever getting any cheaper, only more expensive.

You may be able to buy used solar pannels, but i never seen them anywheres & i been looking, moderately hard for 4 months. I'm begining to think that used solar pannels are either a mith or sell faster than wood pellets in winter during a pellet shortage at a 2.oo a bag discount.

So, best of luck with that.

PS I'm damed glad that my primary heat is secondary burn wood wood stove &
that my pellet stove is just for the nites when I'm too tired to lay the wood & lite the fire & watch it for an hour to be sure the fire settles down.

I sincerely love just pushing the on button & going straight to bed when I am dead beat. Maybe I'll buy some oil instead of pellets.

Click to expand...

Prices of solar can and will come down. I agree cost is a big factor but in time it will be cheaper than fossil fuel, new house construction is the best if going solar if you include it into your mortgage paying the bill is not so bad. Some people have $300 a month electric bill!! I also built a passive solar air panel that can replace 100 gallons of fuel oil in my house, that's a one third reduction and a pay back in one to three years. It's not electrical, or hot water, just heating but starting some where helps, think small that's the most affordable way.

in-control said:

Like myself I am sure that most of you have seen this bait and switch routine performed by the oil companies before. The only reason that oil prices are down is because demand is down due to the slowing, crashing, global economy. Now everyone thinks that the problem is resolved, when in reality the bait is set. If we truely want to start to become energy indipendent then we need to change our short term view and move to a long term one where we keep our $ within the borders and export our products and energy - imagine that!

Click to expand...

Seemingly good points above , but the truth remains that whatever source of fuel/energy we use and wherever it comes from it will always be in the hands and control of those who reap a certain profit from it and this in itself creates a want for more profit (greed)
Let`s be realistic now. The only control we have is to reduce our excessive useage of energy and / or resort to an alternative type and obviously the alternative (such as pellets) will end up costing as much as the fuel we were trying to escape from .
In other words we are pretty much screwed!

Even if pellets and oil are the same price, pellets will be used in our house!
I find it to be a much warmer heat for these old bones

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Agree, more environmentally friendly also!

DiggerJim said:

richkorn said:

I have two 330 gal tanks in the basement that are currently full. Topped off a few different times at an average of about $390/gal. I'll be burning my pellets and saving that $4 oil.

Click to expand...

You're not saving $4 oil, you're saving $3 oil since that's what it costs to replace it. The stuff in your tank isn't worth $4 anymore. The difference in what you paid has already disappeared on you.

Since the replacement cost of oil is less than the replacement cost of your pellets, economically you're better off burning the oil and saving the pellets. Situation may change over time but the sunk cost of what you've already bought has nothing to do with which is cheaper to use right now.

(If you had bought the oil at $1/gal would you think you should burn it even though replacing it costs 3 times as much?)

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Yes, I read your reply a few times and have to agree, i didn't think about it that way. But, i'm not sure about "Since the replacement cost of oil is less than the replacement cost of your pellets." That's not true (I'm in CT)--I'd use a good 600 gallons this winter and that's 'approx' $1800. The 3 tons of pellets I just bought were $900. Even if I need and get a 4th ton, that's still cheaper than heating with oil.

EDIT - After I replied here I went to a fuel calculator and actually at $3 gal oil and $300 ton Pellets there's not much difference in the cost per million BTU's. Ah, whatever, I'll burn the pellets and use the oil for the hot water & heat the pipes while we're not home.

Thanks there DiggerJim for the input!

richkorn said:

DiggerJim said:

richkorn said:

I have two 330 gal tanks in the basement that are currently full. Topped off a few different times at an average of about $390/gal. I'll be burning my pellets and saving that $4 oil.

Click to expand...

You're not saving $4 oil, you're saving $3 oil since that's what it costs to replace it. The stuff in your tank isn't worth $4 anymore. The difference in what you paid has already disappeared on you.

Since the replacement cost of oil is less than the replacement cost of your pellets, economically you're better off burning the oil and saving the pellets. Situation may change over time but the sunk cost of what you've already bought has nothing to do with which is cheaper to use right now.

(If you had bought the oil at $1/gal would you think you should burn it even though replacing it costs 3 times as much?)

Click to expand...

Yes, I read your reply a few times and have to agree, i didn't think about it that way. But, i'm not sure about "Since the replacement cost of oil is less than the replacement cost of your pellets." That's not true (I'm in CT)--I'd use a good 600 gallons this winter and that's 'approx' $1800. The 3 tons of pellets I just bought were $900. Even if I need and get a 4th ton, that's still cheaper than heating with oil.

EDIT - After I replied here I went to a fuel calculator and actually at $3 gal oil and $300 ton Pellets there's not much difference in the cost per million BTU's. Ah, whatever, I'll burn the pellets and use the oil for the hot water & heat the pipes while we're not home.

Thanks there DiggerJim for the input!

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Of course the saving with pellets at a compared to oil is usually that the BTU`s produced from pellets are distributed directly in the actual living space and not wasted in the sleeping quarters.
The bottom line is that there can be a significant savings and that`s what is important to some folks.