Yup, guessing tomorrow's oil price is a fools game. For everyone saying this is the new norm there is someone else saying it will double.
Oil has been in the game a lot longer than wood pellets - with sufficient inventory, it can sustain the supply glut / hit much better than a given mill operation. I imagine wood feed-stock, buyer contracts, and transportation contracts / costs, if pre-arranged, provide some stability to pellet pricing to the dealer, that's what I read from the post. I understand what you are saying about a world market - I just don't know if placing wood pellets in the same category as oil, on a global scale, is applicable, or even feasible, at this point.. It's a commodity, but my take on it is more of a 'niche' commodity at this point. Certainly has the political traction to become a bigger commodity in the future..
I'm not, I am saying that oil pricing has a dramatic impact on pellet pricing as well as most everything else. It is unavoidable. If it has to be transported, then the cost of oil is a major part of the point of sales cost. Pellet pricing cannot be held steady without regard to oil pricing. The folks in the best position to ride the oil roller coaster pricing are the fire wood burners. Harvesting your own wood is usually a predictable and steady cost.
I guess I misread, but that's my bad - the Beer inventory is low here. Agree that fuel costs will directly affect transport, and surcharge rates will climb. As an end consumer, I can only hope the company / mill is negotiating transport delivery rates to keep the final cost low. Also agree that processing & burning your own wood will win, every time. Couldn't go back now - the wife would leave, with the pellet stove. ( Thinking now, which do I love more.. Beer. )
Thank you for your concern. Mr. Samuel Adams and I will be grilling and chilling, real soon now. ... Last of the Summer 'Ale. (sigh). Time for Oktoberfest ! (grin).
LOL - In other news, Natural Gas production suddenly jumped in Southern NH this holiday weekend.. Have a great holiday gents! ( See you after I recover next week.. )
We are selling our pellets wholesale for the same price we were when oil was $100 barrel. Why is that? Because our cost to produce hasn't changed however , on the homeowner side we are competing against oil that has bottomed out. Fuel oil delivery is $190 gallon delivered that's equivalent to buying pellets ~$250 ton.
If transportation cost are down, cost of fuel to run the plant is down, fuel cost to harvest the wood is down, why has that not had an impact on your production cost? It certainly did when they went up and up.
at SIB Jay Maine. do the math for the first two: for 33% more money, you can have 4.7 % more btu's The cost of those 4.7% btu's is 1/3ed more money per ton. Same kind of story for the ash content. difference is 2/3ed of 1%. In a good stove, it is hard to even measure this. But it has a big impact on your wallet esp. if you burn 3 or more tons.
