With the low pellet prices...

[EatenByLimestone]

Are you guys buying multiple years worth and storing them? It looks like a little cash outlay for a shed and a few extra tons could save you lots of money when pellet prices go back up. (probably by next year)

Matt

 

[jtakeman]

I am stuffing in as much as possible. I can get 4 tons stuffed in the basement. That's just about what I need for a season. If space allowed it. I would stuff 2 more in, But it would be to cramped. Now if prices were even lower(about $175/ton), I may add a small storage shed in the back yard. But I just can't seem to justify the cost of a shed just yet. Prices are still over $200 for pellets in my area. I will go out today and get the 4th ton for $230(cubex). Personally I feel these prices are about normal(not over inflated!) or just a bit under normal. So I would need to see what some of the low prices to the west of me are paying to go total gaga.

What I plan on doing is as I use a ton, I will quickly replace it if the prices stay in this range. Or prebuy from a trusted dealer and pick them up as needed. Last resort is to have them delivered in late fall and store them outside. Covered under a tarp in the original wrappers of coarse. This plan addes little cost to the overall pellet bill. Just the delivery fee. So the shed money would go to pellets instead.

Just my 2
jay

 

[Fsappo]

Or do what the traders do, buy low sell high! If I had resources, storage etc, I would be a fool not to stock up on $180 pellets now. So, Matt, it comes down to what it costs to save the money. Say you buy 10 tons tomorrow at $200 per ton. 2010/2011 heating season, pellet prices wont go up unless your one of the "I'll just wait and see if prices go down in the fall" type people (who are great for our pellet margins btw) So the 10 extra tons you buy would go towards the 2011/2012 and 2012/2013 heating seasons. If you assumed a very worst case scenario and those years you couldnt buy pellets, even in the spring lower than $275 per ton, that 10 tons just saved you $750. In order to save that $750 you had to remove $2000 for the pellets + the price of a shed (if needed) from your personal cash flow for 3 years. Take the shed out of the equation. What else could you have done with that $2000 for 3 years that could have given you a better return on your investment? 2K worth of additional insulation? 2K in a mutual fund? 2K towards paying off a 20% interest credit card? Or, the way things look right now, buy 2k worth of oil on the stock market at $85 per barrell and sell when it hits $150. Because if pellets go thru the roof, there is a chance it is due to rising crude.

So, I guess it all depends on ones personal finances, what one considers "lots of money" and the return on investment when considering all factors.

It seems for a homeowner to go thru the effort, would be more about them feeling good 3 years from now knowing they are burning $200 per ton pellets while their buddy is paying $275. For a more serious investor who may have some open warehouse space.. Buy 1000 tons at $200 each. Lay out $200,000 for 3 years to make $75,000 when the prices go up - the overhead of moving the pellets and it might make sense from a true dollars and cents standpoint.

 

[Augmister]

You read my mind.... am building a small shed to hold three tons. I have places to hid the another three tons and would love to buy all my pellets right now!
Looking at a big spike in gasoline over the summer and the Government will soon tax everything that moves, including our beloved fuel! I have NO doubt. They ARE BROKE.