Pellet Vs. Oil Gamble of 2009

[Ossy]

Ok folks, I have seen plenty of griping about the price of pellets as well as oil. Here in Maine where I am at the bottom seemed to have dropped out for the price of oil. It's at $1.88/gal this past Wednesday when I finally had to get some...at that price it will cost me about $17.03 per million btus versus $22.87 per million btus for pellet on an equivalent basis.....about 34% more for oil..with that being said and the current market conditions, it will be a gamble for ANY dealer or producer to try to sell you pellets for more than say $225/ton...I think the market for pellets is going down based on this assumptions:

1. Sure there isn't as much saw dust being produced as a waste product...BUT there is plenty of material sitting in the forests...if they are not using it to make lumber or something else then it will just sit there..I doubt that this will happen...during the peak of oil a woodsman said that he should get $350 per cord for wood since OPEC was getting theirs and he wanted his...I can understand where he is coming from but excessive greed is bad and generally one pays the price for it...
2. People are hurting for cash...we are in the midst of a depression...thats a fact whether those in DC want to acknowledge it or not...give that we are in one, cash flow is very important...only dumb people would spend 34% more for the cost of fuel...I don't believe anyone on this forum will do such a thing unless they have money and a noble cause for whatever reason...again I dont see many people on here willing to pay a premium...to many of you are intelligent enough to do the math to figure it out for yourself...after all that was part of the impetus to go for pellets..
3. I believe in May is when the contracts will begin to open up for oil...if the current trend continues then it may get down to $1.60 to $1.75 a gallon for the short term....people will jump on these prices since it seems "cheap" in relative comparison of the last few years...that being said the pellet dealers/manufacturers will face a market force which they have to compete against...again many people like myself have alternative fuels now...

In closing, I am glad I switched to pellets...The reason being is that I still had to have a heating system down stairs when I finished it off...the cost of installation of hot water base board versus a pellet stove was comparable in initial cost....I still have a piece of mind as well when or if the price of oil goes up for some reason...be it war, greed/price gouging, lack of supply, etc...

It all works for me...

Ossy

 

[rowerwet]

You don't have to look very far for the next big price jump in oil, GREED! In the budget for this year is an energy tax to "reduce greenhouse gasses". (read "gouge you once again stupid taxpayer") All of the money they steal this way will not reduce the solar energy from the sun that caused most of the possible 1* increase, or start the solar flare cycle back up. (it has been almost dead for a while and nobody knows why, but when it stays that way we get an ice age) ( one sumer when the snow never melts across most of the worlds farm land and we are in for it)

 

[Steve NH]

If oil goes up pellets will also go up
If oil goes near $ 4.00 gal you will find that $ 300 /ton pellets would end up being a steal. (If you could find them that cheap)

 

[kinsmanstoves]

What is wrong with using both? There is nothing saying oil and pellets can not be used together.

Remember pellet stoves are spot heat and in no way designed to replace a full house furnace.

Yes I know some people use them for that but that is not what they are designed for.

There is nothing wrong with solar, coal, or corn. They are available and an available option.

Yes one day pellets will be $7 a bag, LP will be $4 a gallon, and heating oil will be $5 a gallon. Just be ready and do not cry to much when that happens. Use all your options.


Eric

 

[jtakeman]

I agree with Eric,

Don't get stuck with one fuel option. If you plan on oil try to get locked in now while the price is low.

There are several other fuels you can convert to and There prices vary. Price shop for what is economical in your area.

We should see the usual price rise in the fall, So try to get your fuel stash now.

Just my 2

jay

 

[56 chevtruck]

i do just that supplement oil with pellet or vice versa. works for me. oil has been low 57.9 litre here on east coast canada.

 

[Scoop]

I think the rising price of pellets reflects the fact that there now is a strong market for them. For a long time pellets were a niche market and producers likely were selling them for very little profit. If I paid $500,000 for a pellet plant i certainly wouldn't be giving the product away.

The pellet sellers now are pricing what the market will bear. If nobody buys, the price will go down. Personally I'm happy having my pellet stove as a supplementary heart source to oil.

I enjoy having the pellet fire going as I enjoy my retirement and find it a big improvement over two decades of felling trees, splitting wood and loading a wood furnace in the middle of the night.

 

[Ductape]

With the price spike in oil this past summer, I was sure I'd never be using oil for heat again. Along the same lines........ last summer my wife and I were talking about replacing our woodstove with a second pellet stove. Then............... along came $300 - $335 / ton pellets. Now ..........in all honesty, i wasn't shocked that oil skyrocketed, but my local stove dealer gaffing people $335 for compressed sawdust????? You gotta be crapping me I definitely learned something in the past year. KEEP ALL 3 OPTIONS After the severe ice storn earlier this winter, with some people without power for near two weeks....... I will never part with my woodstove. We have NG in the street, and had discussed switching from oil to gas several years ago........... but would never do that now. Regardless of how much oil gets to a gallon.......... I don't see us switching to NG because of the monthly service charge all summer. I say fill your oil tanks while the price is down, and buy pellets in spring when they are generally a little cheaper. I keep at least two years worth of firewood on hand, so I'm all set there. YOU'VE GOTTA HAVE OPTIONS !!

 

[JIM P1]

BEEN SELLING PELLET STOVES FOR 14 YEARS AND HEATING MY HOUSE ENTIRELY FOR 5 YEARS. I OWN A REATAIL STORE AND THE BIGGEST COMPLAINT RIGHT NOW IS THS COST OF PELLETS. I AGREE WITH OTHER RESPONSES THAT OIL PRICES WILL NOT STAY THIS LOW. REMEMBER ALSO THAT BY USING PELLETS WE ARE ALL REDUCING THIS COUNTRIES NEEDS FOR FOSSIL FUELS. MOST OF MY CUSTOMERS ASLO TELL ME THAT THEIR HOUSES ARE MUCH WARMER WITH THE PELLET STOVES. AS A RETAILER THE CURRENT ECONOMY HAS A BIG EFFECT ON MY BUSINESS. I PROJECT THAT AS THE HOUSING INDUSTRY REGAINS MOMENTUM, THE PELLET FUEL WILL COME BACK DOWN. MY CURRENT PRICE FOR PELLETS IS $260.00/ TON.

 

[slls]

My house is warmer on oil, you can't beat central heat, duct in every room, thermostat on 70° 24/7. I intend to have all my oil and pellets in this spring, will use both next heating season.

 

[bungalobob]

Yep, just going to find a happy mix of pellets and oil to do the heating. Depended on oil for twenty years in this house, now at least I have an option, whether I save a lot or not.

 

[tinkabranc]

I agree with the others...best to diversify heating options.

When the costs of one go too high, switch to the other.