Jim Kelt, above....too verbose to cut-and-paste
Exactly! The price of ANY energy source is subject to supply and demand! Heck, if wind power got popular, the guys making the turbines and associated accessories would likely charge more as well.....oil, gas, coal, and yes, even cordwood could also follow suit with similar arguments.
Jim brought up a great point thats starting to worry me tho:
The pricing of pellets in my opinion is also very tightly tied to supply and demand. Let’s face it, if pellet manufacturers, and dealers hadn’t pulled East so much fuel from the West coast (Canada), the price in New England would be o.k. and we probably wouldn’t be sitting on so much excess, and likewise, the west coast wouldn’t be having shortages with escalating prices… I know the pellet guys spend a lot of time talking about getting fuel where it is needed and how, but other than a crystal ball I don’t think they have the magic formula yet…
There is certainly a surplus of pellets here in New England right now. We are seeing prices fall for two reasons....one being the warm winter with lackluster pellet sales, and two, the great surplus that currently exists from several suppliers bringing in product from the West Coast. What does this portend for the pellet supply in the winter of '07-'08? Bad news, I fear. Since I see here that the guys on the west coast seem to have shortages, and we have alot of excess pellets right now (not so much me, but the suppliers of pellets), I think next year, the west coasties will "stock up" on product, creating a supply-heavy market there, and less pellets will come here to the NE. Also, since the suppliers are getting crushed with their inventory here in NE, they will either export it to Europe, or not stock anywhere near as much for next season. I see this creating a void of pellets in the NE, which will again cause shortages like we had in '05-'06. Not all grim, because there is opportunity here for folks who might think Im right....and trust me, Im not always right, except where politics come in !....Anyhow, look for pellets in the mid-spring to come down considerably in NE, and take that opportunity to buy them at possibly a discount! If Im right, and there is another scarcity of pellets this fall, the price will again skyrocket, and Ill have to sit here trying to defend the price-gougers in pellets while having to listen to the wood scroungers rant more! Except I will have one consolation! I will have the "I-told-you-so" consolation.....which I will point to at the appropriate time, unless Craig cleans house and deletes it again.
As for the magic formula for pellet supply, i havent figured it out yet. Weve spent years in the bidness, and every year, EVERY SINGLE YEAR, its a different business. Last year, it was how can I get enough pellets to supply my customers, this year, Im worrying about whether my suppliers can weather the storm (or lack thereof!)....For example, on a rising market, how much to make on the pellets so you are being fair, but still have enough capital left after the sale to buy new, higher-priced product. Certainly an interesting bidness, isnt it?