What is the true value of Wood pellets ...

[hockeypuck]

So after this year's crunch on pellets, I have been thinking long and hard about the use of them. Let me start out by saying I burn wood, pellets and oil in that order. My wood insert does 70 percent of the heating and the pellet stove is in the small section of an "L" shaped ranch.

We can all do the BTU conversions and have a pretty good idea when it makes sense to burn oil or pellets. One then has to look deeper into what value you get when you buy oil and pellets. Placing a value on being able to gather and store pellets on your time and dollar is hard to put a number on. Unfortunately, the pellet crunch has taken that positive away from the pellet experience. If producers do not step up and assure the masses that they can maintain a steady supply of pellets through the winter, then pellets have become no better than an oil like commodity.. or even worse, since you cannot get it when you need it. Lets drop the "camel" jockey and "keeping you money at home" routine for a minute. Most of our heating oil comes from Canada.

Fortunately my family is in the position where we can choose from a couple of different heat sources. I buy wood at the beginning of the year and keep two years worth so it will properly season. I put a pellet stove in because it was supposed to be easier to keep and store pellets and I would not have to tend it three times or more a day. I did not want to be a slave to two wood stoves (advantage pellets). The "tending" convienence is great, but the weekly or bi-weekly cleaning is also something to think about. I do not mind doing it, combine that with the dragging 40 lb bags of heat into the family home only helps satiate my "hunter-gather" instincts that has very few outlets in my professional world. Hard to put a price on that. The masses may think of this weekly routine as another reason to kick pellets to the curb. Add the supply issues and one has to think pellets are getting a bad name this year.

So I guess the question is, will pellets be a passing fad for the masses or will it stick. I think we have hit a peak in pellet popularity this year. Just a gut feeling. We all know burning pellets is not for everyone, but the pellet crunch may have soured some of the fringe and some of those looking to get in. Heating oil is not at 2008 price levels, but pellet issues in the north east are extreme. I see pellet suppliers looking to sign up people to a monthly payment program so they can defer the cost of pellets over 12 months. My oil and propane company already does that.... do not take away the freedom to buy our heating supplies as we need them. I understand planning and bought my years worth before the season, but this year was different. If pellet producers cannot provide the product in a way that allows freedom to purchase as needed, they have lost a huge selling point. Just my humble opinion.

 

[chken]

All really good thoughts. There certainly seemed to be a boom in pellet stove sales this year, due to the cold, which fed into the high pellet demand. As long as we get these cold winters, or oil/NG/LP price spikes I think you'll continue to see people turning to pellets.

I think the problems this year were just growing pains. As the pellet infrastructure improves, things will get better.

 

[BrotherBart]

Just as simple as if you want to heat with cord wood you stack three years ahead. If you want to heat with pellets you stack one to two years ahead.

Can't do it? Then don't do it and heat your house some other way. If you can then quit explaining to people how you heat your house. Just do it.

 

[St_Earl]

Just as simple as if you want to heat with cord wood you stack three years ahead. If you want to heat with pellets you stack one to two years ahead.

Can't do it? Then don't do it and heat your house some other way. If you can then quit explaining to people how you heat your house. Just do it.

indeed.
this is my third season burning pellets.
i've been buying 5, and now 6 tons each spring with the aim of gaining progressively more surplus each year.
my wife rolled her eyes a bit as i laid out the plan to fill all unused floor space in the basement.
i'm looking less and less crazy to her as this winter plays out.

 

[PassionForFire&Water]

Just as simple as if you want to heat with cord wood you stack three years ahead. If you want to heat with pellets you stack one to two years ahead.

Can't do it? Then don't do it and heat your house some other way. If you can then quit explaining to people how you heat your house. Just do it.

Well, I did not look at it this way.
2 years seem a little excessive, but yes, stock more then for 1 winter; say 30%

 

[bondo]

You have a pellet shortage and we had a propane shortage. Are we going to stop burning propane here? Ummmm no. A lot of new pellet stoves were bought in this area once the propane shortage started. However we still have pellets here. We dipped down a lot and some ran out but nothing like your area. Everyone refilled though and all is good again here. However between the much colder then normal temps and new pellet stove owners the supply is going to dip. There is just is no way around it. Hopefully everyone stocks up for next winter.

 

[Bioburner]

I went by the local propain tank farm and it is empty yet. 4 rail car tanks by one supplier in a county a hair over 5,ooo people. So the pain of not having any gas still persists on the 6th of March. Will the Bakken oil stop being pumped into the pipe that supplied us propane? Pellets and corn still available here. I drug a 100lb tank of propain to an elderly couple last weekend because they couldn't get a fill till Monday but the weather was still nasty. Weather goes in cycles so I see another winter of ugly coming. Florida looking better all the time.

 

[The Maniac]

To answer your ? true value of wood pellets ? PRICELESS as i watch the oil truck drive by AGAIN

 

[JustWood]

People don't quit eating peanut butter when there's a recall/scare.
Neither will they stop using pellets.
There are no growing pains in the pellet industry. A few of the biggest export only mills could supply the entire US market . Price and pellet quality will determine if this will ever happen (doubt it ever will, unless everyone switches to multifuel stoves/boilers). The infrastructure is there to supply the domestic market just not all at once in a 6 week cold snap.
You can trace this shortage all the way back to the woods/sawmill. No human in the world wants to go cut trees or work in a sawmill at 30 below 0!! And no equipment or electric motor parked outside of an unheated building is going to start either. It's not an issue with pellet mills. They will run 24/7/365 if they have raw product to run.
I recall back around Sept. there were threads about "this years pellet stash" and MANY posters were going to roll the dice and buy as needed ! All I can say is hindsight is 20/20!

 

[MCPO]

There will be plenty of pellets available this coming year but you will undoubtedly see a lot of greed and aggressive increases in pricing based on the unusually cold past winter and current shortage. That of course would cause some to feel the savings isn`t worth the work that pellets entail .This will also have the adverse effect of curbing pellet stove sales.

 

[JustWood]

There will be plenty of pellets available this coming year but you will undoubtedly see a lot of greed and aggressive increases in pricing based on the unusually cold past winter and current shortage. That of course would cause some to feel the savings isn`t worth the work that pellets entail .This will also have the adverse effect of curbing pellet stove sales.

There is no such thing as greed or gouging in a free market. The consumer has the free will to buy or not. If prices skyrocket due to demand there are alternatives. If you put YOURSELF in a position where you have no choice, it's not the retailers fault.
There will probably be some big price increases and you can trace those all the way back to raw product acquisition . Recycled waste product (sawdust) is FAR cheaper than manufactured product (logs to chips to sawdust). A log to sawdust operation is close to a $2 MILLION investment vs. a $250,000 truck to transport recycled waste product to market.

 

[MCPO]

There is no such thing as greed or gouging in a free market. The consumer has the free will to buy or not. If prices skyrocket due to demand there are alternatives. If you put YOURSELF in a position where you have no choice, it's not the retailers fault.
There will probably be some big price increases and you can trace those all the way back to raw product acquisition . Recycled waste product (sawdust) is FAR cheaper than manufactured product (logs to chips to sawdust). A log to sawdust operation is close to a $2 MILLION investment vs. a $250,000 truck to transport recycled waste product to market.

Obviously people have a choice but unless you are gullible you can keep telling yourself and others that opportune gouging doesn`t exist. I can see incremental price increases coming each year but those "big" increases you mention are simply born out of greed .

 

[moey]

The value here is about $3.80gal/oil or around $3.52 gal/propane

 

[RKBAGUY]

I think pellet 'technology' is on the rise and will continue growing unless the Feds manage to screw it up for us (as they always seem to be able to do) by over-regulating what is already one of the most efficient and effective heat sources there is and forcing so many restrictions on the product and manufacture that fewer stoves will be sold. This year's scarcity of supply is, as noted above, because of the unusually cold winter and a lack of good planning. I number myself among them, this being my first year with a pellet stove, I figured 2 tons for my small house would be adequate. Live and learn.

For me, I figure that pellets are more convenient than wood. Though there is some maintenance and tending for both, there seems to be less with a pellet stove. My neighbor across the street has already had the chimney sweep in twice for her wood stove while I burn happily away poring in a bag a day. That, and the significant cost savings it represents, suggests to me that pellet stoves are here to stay. If reports about their popularity in Europe are to be believed, I think we can expect the same here, though it might take a while to catch on.

 

[jlupi]

I dont know 3-$4000 on oil or 6-700 on pellets? even if I ran out and burned oil for march pellets were a huge $$ saver. Not to mention that I heard the EPA was putting a ban on the cheaper wood burners.

 

[Jack Morrissey]

Obviously people have a choice but unless you are gullible you can keep telling yourself and others that opportune gouging doesn`t exist. I can see incremental price increases coming each year but those "big" increases you mention are simply born out of greed .

Well said

 

[wsar10]

Whats more scary than anything is a building boom or lack there of could and WILL affect pellet pricing. I think that's overlooked around here. We are not gonna harvest a hardwood forest just to grind into saw dust and make pellets............People who think the markets wont affect pellet pricing much like fossil fuels are living under a rock ! This is all on top of demand.
The real price of pellets is simply fuel and EPA regulations on manufacturing very little manufacturing labor as most mills are full automation, and get there saw dust for free or VERY cheap. Energex gets %75 of there sawdust for there regular pellets for free from the local lumber yards.

I have also heard that the EPA is doing away with the "exempt" status on Pellet Stove's.

 

[JustWood]

Obviously people have a choice but unless you are gullible you can keep telling yourself and others that opportune gouging doesn`t exist. I can see incremental price increases coming each year but those "big" increases you mention are simply born out of greed .

At what price do you consider "gouging" to start ?
FYI,,,, Whole tree chipping to make pellets in place of using recycled product adds a minimum of $50/ton premium to retail price.
I could buy pellets in 24 ton quantities for $3.20/bag early last summer. If I sat on them till now and sold them for $6/bag ,,, am I gouging?
Listened to a small Oklahoma oil company owner awhile back on CNBC and in his interview he said their cost of drilling and production was $12/barrel . Is he "gouging" ?
I'm a retailer and aware of the prices Dollar Zone pays for product and can tell you it's pennies. Are they "gouging" ? My point is just because someone advertises $12/bag for pellets doesn't mean he's getting it and if he is then that's what the consumer is willing to pay. No one is holding a gun to the consumers head!

I brought this up a few years ago and was poopooed on ! It's reality now. It will affect international market prices but IMHO domestic $ some but not so much. At least for now.
(broken link removed to http://www.pellet.org/wpac-news/cme-offers-low-risk-pellet-trading)

 

[wsar10]

At what price do you consider "gouging" to start ?
FYI,,,, Whole tree chipping to make pellets in place of using recycled product adds a minimum of $50/ton premium to retail price.
I could buy pellets in 24 ton quantities for $3.20/bag early last summer. If I sat on them till now and sold them for $6/bag ,,, am I gouging?
Listened to a small Oklahoma oil company owner awhile back on CNBC and in his interview he said their cost of drilling and production was $12/barrel . Is he "gouging" ?
I'm a retailer and aware of the prices Dollar Zone pays for product and can tell you it's pennies. Are they "gouging" ? My point is just because someone advertises $12/bag for pellets doesn't mean he's getting it and if he is then that's what the consumer is willing to pay. No one is holding a gun to the consumers head!

I brought this up a few years ago and was poopooed on ! It's reality now. It will affect international market prices but IMHO domestic not so much. At least for now.
(broken link removed to http://www.pellet.org/wpac-news/cme-offers-low-risk-pellet-trading)

Seems like most of what you describe is "capitalism" (ooh that evil word !)
Even if a guy buys pellets @ $3 a bag than sales later for $6, HE took the risk (investment), He transported them, HE stored them, HE sold them...........and all 4 of those things cost money.

 

[undr]

The value here is about $3.80gal/oil or around $3.52 gal/propane

Up here in new brunswick canada we are paying $1.32 per liter that times 3.78 gives us $4.98 per gallon of furnace oil. the cheapest pellets around here are around 4.50 per bag(Crabbe). i pay 5.99 for canwick's. in january i spent $700 on furnace oil to heat my 2400 sq feet home. in the last three weeks i have spent $220 on pellets( i bought 10 bags today). i usually spend $500 in february for oil. i am ahead.

this summer i will spend 700 bucks blowing 3 feet of insulation in my attic. i am tired of blowing heat out through my roof

 

[RKBAGUY]

Obviously people have a choice but unless you are gullible you can keep telling yourself and others that opportune gouging doesn`t exist. I can see incremental price increases coming each year but those "big" increases you mention are simply born out of greed .

Is there any less greed in wanting a price to be low, rather than high?

 

[Bioburner]

Just drove by the propain tank farm and it was empty. Pellets allow us to buy off season and not have to depend on someone else to come and fill and charge us what ever the local price can handle. I was in fire school today and they brought in two forecasters-climatologists from National weather service and was very interesting 2 hours.

 

[Lake Girl]

One aspect no one has touched on is the "just in time" mentality that pervades business ... whether it's car parts or pellets. Estimations are made of quantity needed so the manufacturer or supplier will not be stuck holding the commodity too long. Since weather doesn't necessarily pay attention to commodity planning, you get the "perfect storm" of this winter. Meteorologists estimated warm winter so propane was sold cheap in the fall to farmers ... shortage for the residential customers due to the extreme cold. Likely the same deal for pellets with the additional problem of forestry workers being unable to acquire more raw materials for manufacturers (as mentioned above).

Could get more interesting yet when you factor in some of the electrical power generation is coming from pellets ... what do you want more - heat or electricity?

 

[BrotherBart]

Is there any less greed in wanting a price to be low, rather than high?

Yeah everybody gets giddy when the big boxes get stuck with pellets and put them on for firesale prices or they use a bogus moving coupon. But when the gate swings the other way...