Why I'm not that worried about pellet pricing

[squeed]

Let me know if you agree with my thinking. Traditionally most people heat their homes with either: Natural Gas, Electric, Propane, Heat Pump (Same as electric), Baseboard (steam) or Oil.

I think it is rare that homes are built with Pellet Stoves as the primary source of heat. Also, it is rare that existing homes have just pellet stoves as their primary heat. Now before a bunch of people jump all over me, I know that there are people out there that use pellet stoves as their primary heat, but 99% of the homes in the country don't.

Since 99% of the country have alternate sources of their primary heat, that means that they have a choice. So if pellets get so expensive that it makes sense to buy oil, natural gas, electricity, propane etc ... Then nobody will buy pellets anymore and the mills/distributors will either go out of business or have to lower their prices.

So don't we have built in protection ?

-S

 

[Lousyweather]

well, we DO have built in protection in the fact that most of us can utilize different means to heat our homes. I can burn pellets and/or oil. I do completelt heat my home with pellets as well. The only flaw I see here is that with fewer people buying pellets (in your scenario), the heavily-invested companies who make pellets would get to a point where they make no business and fail. This would affect that microeconomy by making less suppliers out there, meaning less supply, and the pellet price would self-regulate. In the end, its going to be likely the best-run organization that flourishes, just like ANY business, be it pellets, or any commodity.

 

[Souzafone]

And what happens when there are no pellets and HHO is $5/gal? You're correct in stating pellets are a niche market, as such, pricing matters less to those buying it for reasons other than price, and for the majority of those selling it, who have other products. I'll probably buy 2 or 3 tons this spring or summer, if I can get a good price. If not I've still got 3 left, and a full tank of oil. Pellet Pig Protection, yeah baby. Burn more, worry less.

 

[newpelletstove]

Let me know if you agree with my thinking. Traditionally most people heat their homes with either: Natural Gas, Electric, Propane, Heat Pump (Same as electric), Baseboard (steam) or Oil.

I think it is rare that homes are built with Pellet Stoves as the primary source of heat. Also, it is rare that existing homes have just pellet stoves as their primary heat. Now before a bunch of people jump all over me, I know that there are people out there that use pellet stoves as their primary heat, but 99% of the homes in the country don't.

Since 99% of the country have alternate sources of their primary heat, that means that they have a choice. So if pellets get so expensive that it makes sense to buy oil, natural gas, electricity, propane etc ... Then nobody will buy pellets anymore and the mills/distributors will either go out of business or have to lower their prices.

So don't we have built in protection ?

-S

Squeed, I think you are right-on. Pellet prices will self-regulate, like anything else:

* If pellet prices are high, people will demand less, and there will be some combination of prices coming down and/or the supply coming down (especially if pellets are hard to make for the lower price).

* If pellet prices are low, people will demand more, and there will be some combination of prices going up (as manufacturers understandably try to make more $), and supply going up.

It's everyday supply and demand.

 

[Fairlane 500]

This is my first heating season with a wood pellet stove. You learn fast about how crazy people can get when the temperature drops below zero and everyone in the area has suddenly found a more affordable means of staying warm. My Quad-Fire Mount Vernon may have been costly but, it will pay for itself in two years against the price of HHO. At first, pellet availability was questionable. The stove dealers get top dollar and sell excellent quality pellets as fast as they arrive. Even Lowes and Home Depot have a junk pellet. Tractor Supply Co. employees are weary from having to referee the fights between customers over who gets the next pallet off the weekly delivery truck. The Kentucky Somerset pellets they carried were very good quality. Here, they have replaced them with ProPellets out of Indianna and they seem to be excellent if you don't put your fingers through the bags while carrying them. The American Wood Fibers are getting more plentiful at the stove dealers. I've always trusted the law of supply and demand. Prices will even out if the government leaves the manufacturers and the home owners alone. How likely is that to happen?