Heating Oil prices put Pellets on back burner.

[hockeypuck]

Wood doesnt seem very low cost to buy up here, so wouldnt expect to see a cheap market flood happen.

Three reasons for pellets to go down.
1. Canadian dollar. vs. US dollar Year over year.
2. Yuan plunge.. US/Canadian wood more expensive to export to China
3. Euro Vs. Dollar.. see #2.
4. Oil Glut.

Have I missed something?

 

[Bioburner]

Europe already is accepting higher energy costs for less reliance on oil. So they will import more wood to feed boilers.

 

[maple1]

Three reasons for pellets to go down.
1. Canadian dollar. vs. US dollar Year over year.
2. Yuan plunge.. US/Canadian wood more expensive to export to China
3. Euro Vs. Dollar.. see #2.
4. Oil Glut.

Have I missed something?

Guess we'll have to wait & see then.

When do you think prices will go down?

 

[PinetreePellets]

I would have paid 6000$ for 3ft of pipe. Just get the gas in my house. Its worth every penny in my eyes

I got 3" of black iron sitting around somewhere, but i only accept cash

 

[canmic]

I thought the Canadian government owned most of the forests, they seem to in NB.

It's a lot more complicated than that, actually.

In Canada, almost all of the land (over 90%) is owned by either the queen, referred to as "crown land" (represented by the federal government). Another 8% is owned by the First Nations (you call them Indians down south) ie: the "Reserve Lands". In the early 1900s, the Federal government turned over control of about half of the queen's land (48% of all the land in the country) to the Provincial governments (like State governments in the USA).

There are a few other types of land, not owned by the queen (crown):

1) The railways were given ownership of a bunch of land in exchange for building the railways. That land is true Freehold. The railways own it in every way, up to a height of some number of feet that I forget and to the highest expected edge of any waterways (high tide for the ocean, spring run for rivers, etc..)

2) SOME small amounts of land were given by the queens/kings to various people or companies between about 1600 AD and 1930 AD. These are sometimes Freeholds and sometimes Fee Tail (basically you can't sell it and it can only pass to your next in line heir, if you have no heir, it reverts to the crown). Some were also Life Estates that couldn't be sold or passed on to heirs but I don't think there are any of those left, there might be.

3) The First Nations used to be considered Fee Simple, but our wonderful court system has invented a whole new kind of ownership called "aboriginal title" which is extremely confusing and means something different depending on who you talk to. That court decision basically put Canada into a recession for the forseeable future.

Other than the First Nations, Railways and the tiny bits of land that were given away by the queens/kings, it's all still government land.

People who "buy" land or are "given" land by the federal or provincial governments are not actually the owners of the land. Their interest in the land is a "Land Tenure" referred to as "Fee Simple Tenure". They THINK they "own" it, but, they don't. One HUGE important difference is that the government owns all the resources. That includes: mineral resources, trees, water from the ground (but not rainwater if you catch it before it hits the ground), the air above the land and almost anything else you can think of.

So, unless you have Aboriginal Title or have land that was either part of the railway lands or was one of the tiny number of freeholds (many were given to the church and the church makes a point of buying any freeholds they can get their hands on), you are basically a tenant on government land and you need a permit to cut down a tree.

Logging companies pay stumpage fees that are set by the provincial or federal government, oil companies pay oil royalties to the provincial or federal government, etc...

And if you dig a hole in your backyard and find gold, not only does it not belong to you but whoever files a claim on it first can come in and turn your entire property into a pit mine and they don't have to compensate you at all. You also can't keep licensed prospectors from coming onto your land and taking "samples" which can be truckloads of rock at a time.

Many people don't know or understand all this, which is why we didn't have our own version of the American Revolution.

Sorry for the history lesson, but I thought that it might be interesting. If not, why did you read all the way down to here?

 

[sam_m]

That court decision basically put Canada into a recession for the forseeable future.

Interesting lesson indeed. Can you elaborate on the above point?

 

[Bioburner]

Courts also decided that if your living outside of Canada you can't vote either even thou you still pay taxes

 

[canmic]

I don't think shipping costs are the only factor in pellet prices. And everyones fuel situations on this continent are not the same as yours. So don't think labelling people fools is warranted.

I recently had a long talk with a friend who is part owner of a very big pellet making company. It was interesting.

Pellet prices, like oil prices, are tricky.

It's all about supply and demand and inventory.

Also, there are speculators playing in the wood pellet market now, similar to what happens with mining and oil.

Last winter was really really cold so a bunch of speculator types pre-bought the right to buy millions of tons from various pellet mills at a set price, for delivery in a given month. The pellet mills MUST deliver those pellets to those buyers at those prices. If they can't make them for some reason (equipment problems or whatever) then they have to BUY them and deliver them that way, the penalties are HUGE if they don't.

So, what happens is that if the mill gets to the end of the month and they have more pellets than they have pre-sold, then they look for buyers for that month's "extra" pellets. Keeping pellets in inventory is very expensive for them, so they want to sell them off immediately. They do keep some "just in case" inventory so that they can be sure to meet their commitments for the next month, but they don't want to keep too many sitting around.

Most of the power plants that were buying pellets are converting back to oil because oil is cheap, BUT they have a lot of room to store pellets and their pellet inventories were depleted by the long winter and pellet shortages so they had to refill those inventories, just in case the price of oil goes up again.

It can also go the other way. If the price of pellets seems to be going down, and the speculators "right to buy" is above the market price, then they will let that option expire and that will free up a bunch of pellets for the mill to sell, so they have to look for a buyer for them, to make room for making more pellets. But the mill isn't sure if the buyer will buy or not, until the contract actually expires (ie: the 1st of the next month).

So, in a nutshell, it's all about timing.

I needed to buy a bunch of pellets for the winter so I kept my eye on the prices for a while, they always dipped down right at the end of each month and then jumped back up again. I stocked up at the beginning of July for $200 a ton. A few days before I bought, before the June contracts came due, the price was almost $300 a ton, at the end of July, due to the fires in BC, some of the pellet mills were closed for part of July so the price peaked back up at $315 a ton, it's floating around $300 a ton right now.

Of course, different pellets are different prices, just like different oil sells for different prices (Sweet light crude, West Texas Intermediate, etc). I'm using premium mixed softwood pellets (SPF) as my benchmark, because that's what I burn.

So, if it starts raining in BC, expect pellet prices to come down a bit at the end of august but not too far down because a lot of people with pellet stoves/boilers/etc will be buying them and that will keep the price from falling too much.

Not many people are thinking about cold winters and pellets around the 4th of July weekend, and the fires hadn't started in BC yet, so it was a great time to buy. If the fires hadn't happened in July, then the price likely would have been around $175 a ton at the beginning of august.

I haven't looked at numbers recently but last time I looked, over 2/3 of all the wood pellets in the world are made in BC...

Interestingly, 2 major pellet mills in BC went bankrupt in 2013 and 2014 because they couldn't find any buyers for millions of tons of pellets!!

 

[canmic]

That court decision basically put Canada into a recession for the forseeable future.

Interesting lesson indeed. Can you elaborate on the above point?

Basically it let the First Nations shut down most of the mining, stop any new natural gas production and transport, stop any oil transport, etc...

The oil price crash put things "on the edge" and shutting down all the mining put the nail in the economic coffin.

But the lawyers are getting VERY rich

 

[ylomnstr]

I just ordered oil for the first time in about 4 years. $1.95 per gallon, so I couldn't pass it up. I'll probably still get my normal 4 tons of pellets, but I may be more cautious about when I use them. I planned on getting 5 tons this year since I added a pellet insert in my basement fireplace last year, but I'll hold off for now.

 

[canmic]

Courts also decided that if your living outside of Canada you can't vote either even thou you still pay taxes

Actually, odds are that if you are still paying Canadian taxes, you can still vote.

The decision was that if you have not maintained any Canadian residence, are not working abroad for the Canadian Government (ie: diplomats, military, etc), and you have not stepped foot into Canada for over 5 years, then you can't vote.

The law is that if you do not have a residence in Canada, are not working for the Canadian government and do not enter Canada, any income that you earned elsewhere over 2 years prior to your return to Canada is not subject to Canadian income taxes.

I looked at it all pretty carefully, and it's nearly impossible to be paying Canadian taxes and not be able to vote (if you are a Canadian Citizen). I suppose that someone could really do things in some sort of extremely taxable way and manage it, like if you move to the US and don't transfer your pensions into a 401k, but you'd have to almost deliberately be paying taxes that you could legally easily not have to pay.

 

[canmic]

I just ordered oil for the first time in about 4 years. $1.95 per gallon, so I couldn't pass it up. I'll probably still get my normal 4 tons of pellets, but I may be more cautious about when I use them. I planned on getting 5 tons this year since I added a pellet insert in my basement fireplace last year, but I'll hold off for now.

I checked the price of oil here friday, just to see, it was $4.78 per US gallon.

The governments here tacked on a bunch of new carbon taxes and transit taxes July 31st.

Yep, they put transit tax on heating oil. They put it on gas and electricity too.

 

[Bioburner]

Actually, odds are that if you are still paying Canadian taxes, you can still vote.

The decision was that if you have not maintained any Canadian residence, are not working abroad for the Canadian Government (ie: diplomats, military, etc), and you have not stepped foot into Canada for over 5 years, then you can't vote.

The law is that if you do not have a residence in Canada, are not working for the Canadian government and do not enter Canada, any income that you earned elsewhere over 2 years prior to your return to Canada is not subject to Canadian income taxes.

I looked at it all pretty carefully, and it's nearly impossible to be paying Canadian taxes and not be able to vote (if you are a Canadian Citizen). I suppose that someone could really do things in some sort of extremely taxable way and manage it, like if you move to the US and don't transfer your pensions into a 401k, but you'd have to almost deliberately be paying taxes that you could legally easily not have to pay.

The court decision was recent. I have been looking at moving south and a site I subscribe to published it earlier this summer and I thought it was pretty extreme in making one stay in country for more than 80% of the time in order to maintain voting privileges even if they are taking your $$$.

 

[Grisu]

The court decision was recent. I have been looking at moving south and a site I subscribe to published it earlier this summer and I thought it was pretty extreme in making one stay in country for more than 80% of the time in order to maintain voting privileges even if they are taking your $$$.

Is that any different from foreign residents living and paying taxes in Canada but without voting rights?

The ruling was also that after 5 years of not living in Canada you cannot vote any longer in their elections: http://www.cbc.ca/news/politics/lon...te-in-federal-elections-court-rules-1.3160110 It depends on the tax treaty that Canada has with the country the person lives in but usually after 5 years you would pay taxes in your country of residence, not Canada. In the US that happens after 2 years at the latest. The two plaintiffs, for example, are both paying taxes in the US, one is even an US citizen: http://www.cavalluzzo.com/docs/default-source/cases/c58876-rere_4-(c1382077xa0e3a).pdf?sfvrsn=0

 

[LordmetalZ28]

I got 3" of black iron sitting around somewhere but i only accept cash

I have the gas already. Wouldnt even look at houses without natural gas and town water and sewer when I bought

 

[slls]

It's a lot more complicated than that, actually.

In Canada, almost all of the land (over 90%) is owned by either the queen, referred to as "crown land" (represented by the federal government). Another 8% is owned by the First Nations (you call them Indians down south) ie: the "Reserve Lands". In the early 1900s, the Federal government turned over control of about half of the queen's land (48% of all the land in the country) to the Provincial governments (like State governments in the USA).

There are a few other types of land, not owned by the queen (crown):

1) The railways were given ownership of a bunch of land in exchange for building the railways. That land is true Freehold. The railways own it in every way, up to a height of some number of feet that I forget and to the highest expected edge of any waterways (high tide for the ocean, spring run for rivers, etc..)

2) SOME small amounts of land were given by the queens/kings to various people or companies between about 1600 AD and 1930 AD. These are sometimes Freeholds and sometimes Fee Tail (basically you can't sell it and it can only pass to your next in line heir, if you have no heir, it reverts to the crown). Some were also Life Estates that couldn't be sold or passed on to heirs but I don't think there are any of those left, there might be.

3) The First Nations used to be considered Fee Simple, but our wonderful court system has invented a whole new kind of ownership called "aboriginal title" which is extremely confusing and means something different depending on who you talk to. That court decision basically put Canada into a recession for the forseeable future.

Other than the First Nations, Railways and the tiny bits of land that were given away by the queens/kings, it's all still government land.

People who "buy" land or are "given" land by the federal or provincial governments are not actually the owners of the land. Their interest in the land is a "Land Tenure" referred to as "Fee Simple Tenure". They THINK they "own" it, but, they don't. One HUGE important difference is that the government owns all the resources. That includes: mineral resources, trees, water from the ground (but not rainwater if you catch it before it hits the ground), the air above the land and almost anything else you can think of.

So, unless you have Aboriginal Title or have land that was either part of the railway lands or was one of the tiny number of freeholds (many were given to the church and the church makes a point of buying any freeholds they can get their hands on), you are basically a tenant on government land and you need a permit to cut down a tree.

Logging companies pay stumpage fees that are set by the provincial or federal government, oil companies pay oil royalties to the provincial or federal government, etc...

And if you dig a hole in your backyard and find gold, not only does it not belong to you but whoever files a claim on it first can come in and turn your entire property into a pit mine and they don't have to compensate you at all. You also can't keep licensed prospectors from coming onto your land and taking "samples" which can be truckloads of rock at a time.

Many people don't know or understand all this, which is why we didn't have our own version of the American Revolution.

Sorry for the history lesson, but I thought that it might be interesting. If not, why did you read all the way down to here?

I thought Canada divorced the Queen you are referring to?

 

[bags]

canmic,
Interesting stuff. Thanks. Wow, what a screwed up mess though. Just a great example of why big government does not work. What is ridiculous is many in the US vote for stuff that promotes stuff you speak of. They had better get their head out of the sand.

 

[maple1]

No permit needed here to cut my trees down.

 

[bags]

There is NO WAY I could deal with an all controlling set up like what canmic deals with. My hat is off to ya. This cowboy doesn't play those games.

 

[Pete Zahria]

Three reasons for pellets to go down.
1. Canadian dollar. vs. US dollar Year over year.
2. Yuan plunge.. US/Canadian wood more expensive to export to China
3. Euro Vs. Dollar.. see #2.
4. Oil Glut.

Have I missed something?

Oh yeah.

 

[ScotL]

.
.
.
But the lawyers are getting VERY rich

Funny how it always seems to work out that way.
(Insert favorite lawyer joke here)

 

[Brian26]

Down to $1.60 a gallon in the New Haven, CT area. I think we may see $1.50 a gallon soon with oil prices still dropping.

 

[HarmanManP43]

Chinese markets took a serious dump while we slept... While i'm loving the cheap heating oil it doesn't offset the beating my 401k is taking over the last 2 weeks!

 

[Bioburner]

I had advised my parents to pull out a month ago and they finally did it two weeks ago. Not a total rout, I got a Big thanks Saturday.

 

[HarmanManP43]

I had advised my parents to pull out a month ago and they finally did it two weeks ago. Not a total rout, I got a Big thanks Saturday.

Good catch. Being 28 I'm pretty aggressively invested so the 401 doesn't really get touched. I'm young enough where it can be left in and it will recover on its own!

I managed to move a good chunk of my private portfolio but regret not pulling it all as I still took an ugly hit on what I left in.