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Are cord prices dropping as much as oil?

Post in 'The Wood Shed' started by BucksCoBernie, Dec 22, 2008.

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  1. BucksCoBernie

    BucksCoBernie New Member

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    I just got off the phone with a local home heating oil company and was quoted $1.849/gal based on 150 gallon delivery.
    When I last purchased 150 gallons (October) I paid around $3.35/gallon.

    Im still seeing people on craigslist trying to sell a cord of "seasoned" wood (oak) for $200+.

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  2. LLigetfa

    LLigetfa Minister of Fire

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    There's a much larger labour component in firewood than in oil. If it's seasoned firewood then it was probably cut and processed when fuel costs were high and fuel costs make up another part of the price.

    If your oil tank was still full of $3.35 oil would you sell it at $1.85 now?
  3. SteveT

    SteveT Feeling the Heat

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    Same here. The prices around here went sky high in the spring and summer. I guess that made sense -- at some level wood has to compete with oil, NG etc and there was no reason NOT to maximize profit while they could. Cordwood at $250 or even $300 a cord make economic sense when oil was near $5.00/gallon.

    But now the wood sellers seem to hold onto the prices of a few months ago even though the competing fuels have plummeted in cost. I can't imagine any serious wood burners are still buying.

    Very much like real estate. Sellers want to sell at what their house was worth at the peak and not what it's worth now. But eventually prices will have to align with the market.
  4. smokinj

    smokinj Minister of Fire

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    wood aroud here stays pretty steady 100 to 150 cord for many years now
  5. BucksCoBernie

    BucksCoBernie New Member

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    Im a consumer. I'd buy at the lowest price available, from the person with the lowest price.
  6. SaratogaJJ

    SaratogaJJ New Member

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    The answer to your question is yes, if I was a retailer and I knew that refilling my supply would only cost me $1.85 per unit. This is because my competitors are also likely refilling their tanks at $1.85 per gallon at this very moment, and are preparing to sell at that price. Even though I might have paid $3.35 for it, if I want to sell it, I'm going to have to sell at pretty much the identical price as my competitors are charging.

    Your analogy is good on its face, but it overlooks the fact that the price of a fungible commodity, like fuel oil or gasoline, is highly dependent on what it will cost the seller to renew his/her stock. So, when gasoline is going for $3.00/gallon, that's not necessarily what the retailer paid for it, but what they expect to have to pay for the next delivery.

    It would seem to me that, assuming prudent woodlot management, firewood has a cost of production that is relatively steady, aside from some variations in fuel costs. Since the cost of gasoline and diesel is dropping, then folks who are selling cordwood should be anticipating that it will cost less to create next year's supply, as much of the cutting is being done right now.

    As soon as one seller of cordwood - which, when unseasoned, is about a pure a commodity as one can imagine - in a given geographic area can lower the price by a significant amount (say, $25-$50 per cord), other suppliers will begin dropping their prices accordingly. It will likely happen when one producer decides that they can generate the same profit by selling a cord at $150 instead of $200.

    As was also pointed out, the fact that fuel oil has gone down by more than 50%, and a somewhat smaller decrease in natural gas, is probably creating downward pressure on sellers of cordwood. Decreased demand always leads to decreased prices, assuming a constant supply.
  7. xjnuttier

    xjnuttier New Member

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    LOL good things are seldom cheap and cheap things are seldom good, I am willing to pay a lil more for truely well processed, covered, and seasoned wood, it is a lot of work and work I am paying to have done for me, when I am buying wood. I honestly won't buy the cheapest wood, unless it is well seasoned. LOL I have several cords of wood I split last week, and had dropped last winter. I burned a few pieces and listened to the sizzle.. I am buying 2 cords weds..I did some calling around today and I beleive i got hooked up with a good guy, i will know soon enough. he is charging me $150 to fill up our f 350 dump which holds close to 2 cords of wood. he told me it has been split for a year and under tarp all year except during the summer for seasoning. I am kinda excited he lives real close to me, and by far cheaper than alot of others, the average for a cord in the lanaster, pa area is around $160 per cord. the low I had seen was 125, until i met this guy today, and the high being around 200 per cord, but that was specifically all oak.
  8. xjnuttier

    xjnuttier New Member

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    LOL good things are seldom cheap and cheap things are seldom good, I am willing to pay a lil more for truely well processed, covered, and seasoned wood, it is a lot of work and work I am paying to have done for me, when I am buying wood. I honestly won't buy the cheapest wood, unless it is well seasoned. LOL I have several cords of wood I split last week, and had dropped last winter. I burned a few pieces and listened to the sizzle.. I am buying 2 cords weds..I did some calling around today and I beleive i got hooked up with a good guy, i will know soon enough. he is charging me $150 to fill up our f 350 dump which holds close to 2 cords of wood. he told me it has been split for a year and under tarp all year except during the summer for seasoning. I am kinda excited he lives real close to me, and by far cheaper than alot of others, the average for a cord in the lanaster, pa area is around $160 per cord. the low I had seen was 125, until i met this guy today, and the high being around 200 per cord, but that was specifically all oak.
  9. LLigetfa

    LLigetfa Minister of Fire

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    While that may hold true in the US for gas and oil, it doesn't necessarily extend to other commodities.

    The cost of wood is tied to the cost of oil in two ways. One is that the producer surcharges his fuel consumed at time of processing and the other is market demand. When oil goes up, more people switch to wood, increasing demand on a limited supply. If supply surpasses demand, the price may go down but since oil is still fickle, people are still buying wood becuse they don't want to get caught short should oil go back up and demand shoot up for wood. You can buy your oil "just in time" but good luck buying your wood that way.

    The other thing to consider is that wood price is a very regional thing, not subject to global pricing like oil. Chances are your oil doesn't come from the same county as your wood. It costs more to transport wood than oil, there is not a multi-national corporation in charge of wood distribution, and the USDA will not put transport restrictions on oil because of disease outbreaks.
  10. SaratogaJJ

    SaratogaJJ New Member

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    First off, I should point out that my comments extend only to unseasoned, 'mixed hardwood.' Once you get into varying levels of seasoning, or type-specific types of wood, then you are getting into specialization and variables that make things slightly more complicated.

    I would say that commodities that do not conform to this general economic principle are the rare exception, not the rule. In fact, what makes a 'commodity' a 'commodity' is that the goods are essentially identical no matter from whom you buy them; the only appreciable difference is the price, which is directly tied to the supplier's cost of producing the good.

    I can agree with you that if the cost to produce a cord of wood was $150 because the cost of fuel was high at the time, the temptation is there to sell that cord for no less than $150, plus an undetermined amount of profit. However, if a new producer starts cutting and selling wood this season at $100/cord because of lower fuel prices, then there is no way that the already existing producer is going to sell that wood at $150, even though that's what it cost him to produce it.

    You are correct, and there are some folks who don't want to get caught short by a sudden re-spike in the price of fuel oil. However, the vast majority of people, human nature being what it is, don't plan that far ahead. Just ask people who sell shovels and snowblowers and air conditioners.

    It is certainly true that a cord of wood in rural Maine probably costs something different than, say, a cord of wood in the Pacific Northwest. However, wood producers still have local competition no matter where they are located, and competition is what will play a large role in driving the retail cost of the wood.

    My intuition tells me this is, at best, a dubious assertion. It also flies in the face of your assertion that wood is, by its nature, a local product. I am skeptical that the cost of transporting 1 million BTU's of cordwood to your house is more than the transport of the equivalent BTU's worth of fuel oil to your house's storage tank. (Natural gas may be a different story, though.)

    I believe that these two factors have a negligible impact on the price of a cord of wood.
  11. SteveT

    SteveT Feeling the Heat

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    The whole issue comes down to a meeting of the minds on (a) what the seller is trying to get and (b) what a buyer is willing to pay. The seller's cost has a lot to do with what he wants; it has almost nothing to do with what a buyer is willing to pay (particularly if there is an acceptable alternate such as buying elsewhere or not buying at all).

    The question regarding whether you'd sell oil at $1.85 if it cost $3.35 really hits the point. The answer is YES, provided you had to sell and that is all a buyer would pay. It is just like the stock market -- the stock has a value and that value is in no way related to what the seller paid for it.

    If an oil dealer bought at a low price and then saw the retail value of his stock increase they could make a killing. If it goes in the other direction they'd lose. The guys selling cordwood are in a similar situation. They had a more valuable commodity when oil/gas/propane was higher price. In my opinion they'll have to adjust. I don't believe most people will pay a large premium to heat with wood.
  12. LLigetfa

    LLigetfa Minister of Fire

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    OK, I shot myself in the foot on that one... poor choice of words, commodity.
    AFAIK most firewood sellers are making a meager living, not getting rich so if other pressure raises the price, they are not likely to undercut each other. They cannot afford to get into price wars like the oil company can.
    Hardly a fair comparison. You can walk past the shovels at Walmart every day, comfort in the fact (false or otherwise) that one will be there when you need it and maybe even cheaper then. The firewood procrastinators can choke in their greenwood smoke for their lack of foresight.
    Ja, well... the "competition is the commercial wood business. Firewood is a sideline for many, where they supply wood to the forest products industry which pays much more per cord than you and I would for firewood.
    Well... The oil distribution system is, erm... a well oiled machine, far more efficient and economical. One tanker of oil will plan his route and make several drop-offs. My wood guy pretty much blows his whole evening delivering one truckload to my house. I watched my wood guy unload my 12 cord with his grapple in -40 temps and almost felt like I should give him more than the agreed upon price.
  13. Slow1

    Slow1 Minister of Fire

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    Cord wood here was selling for closer to $210 early summer - and was over $300 by late fall. It does not seem to have fallen (based on craigslist survey). Now that is for 'seasoned' hardwood (something that I don't really think exists on the market here, but that's another topic). I suspect the price will remain high as there is a perceived shortage (even if there really is plenty available) due to the time of year - 'everyone knows it is hard to get seasoned wood in December' right? So... I'm hoping that this spring there will be ample supply of this (and green) wood available to help drive the cost down... hopefully those landscaping companies who stocked up on cordwood this year will have a lot left over and need to make space for their normal summer stocks.... I can hope anyway.
  14. mikepinto65

    mikepinto65 Minister of Fire

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    Screw the oil companys, support your community and buy from a local wood supplier
  15. Outdoorsman

    Outdoorsman New Member

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    In fall good seasoned wood was selling for about $85.00 per 1/3 cord, now it's down to as low as $35.00.

    I think that in my area this is due as much to the very large numbers of folks who jumped into cutting wood to sell..... And now the market is to well supplied. Not say'n the lower cost of fossil fuels has not had a impact as well, but this area has a surplus of wood, not a shortage like many other areas do.

    The surplus of wood will be gone in just a couple more years as all the dead ash trees are used up or start to go to rot.

    But for now the price of wood is low here.
  16. lexybird

    lexybird Minister of Fire

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    the market of consumers sets the price and most people feel the market for oil and gas is resonable now but fully expect it to rise sharply up high again not so long from now, this friegthens pople in a already poor economy and makes them more likely to convert over to alternative economical heating sources like wood heat(i know i recently did just that myself this year) ,simple concept of supply and demand .whe n oils high the alternative demand increases so people will need more wood and the cost will rise of wood right along with oil but it wont always fal l with it becuase when oil is cheap they use it (oil)up instead of the tedious laborsome task of dealing with wood despite its low price .
  17. Bigg_Redd

    Bigg_Redd Minister of Fire

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    I'm still getting wood for free, so, no, the price hasn't dropped.
  18. arcticcatmatt

    arcticcatmatt New Member

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    Full cords here are still 160-250

    I called around for oil yesterday to 8 places. Prices ranged from 2.47 - 2.95
  19. thebeatlesrgood

    thebeatlesrgood New Member

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    people aren't paying you to take their wood yet. oh well, there's always next year. :)
  20. xjnuttier

    xjnuttier New Member

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    LOL dont waste your time calling around, you are into the net, I get my from priceenergy.com, and they were quoting me 1.99 last week for 150 or more gallons, shop the net for oil to, and it was a local supplier who was charging like 30 cents more delivered it to me for them, HUH, and that 30 cents extra per gallon was for what?...LOL use the tools that are right in front of you....
  21. xjnuttier

    xjnuttier New Member

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    LOL dont waste your time calling around, you are into the net, I get my from priceenergy.com, and they were quoting me 1.99 last week for 150 or more gallons, shop the net for oil to, and it was a local supplier who was charging like 30 cents more delivered it to me for them, HUH, and that 30 cents extra per gallon was for what?...LOL use the tools that are right in front of you....
  22. woodconvert

    woodconvert Minister of Fire

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    I went on a bit of a snoop around today (as I had today off) and found a bunch of guys selling wood. $150-$180/cord as usual...but what I did notice is....they aint sellin' it. It's not moving. People are just not buying it. I don't know if that's because people are holding tight with their cash or they think the price is too high or what....but there's gobs of it to be had in my area.
  23. 8nrider

    8nrider New Member

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    hey thebeatlesaregood i heard people were paying people to take there wood away last week inparts of north central mass. hopefully that wood will stay locally!!!!
  24. thebeatlesrgood

    thebeatlesrgood New Member

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    north central mass huh? well im north eastern mass just south of salem new hampshire so it shouldnt be to far away. hopefully it does stay pretty locally, like in my backyard :) . oh no, now you've made me drool :p .
  25. Slow1

    Slow1 Minister of Fire

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    If you could cite a source I'd appreciate it.. It would be worth the drive even with a rented truck to get a good supply of wood if I could get a decent lead on that.

    Thanks.
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