Pelleting The Heating Bill…..

Posted: 14/05/2008 in Uncategorized
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It appears as though Maine’s one time ski king Les Otten has jumped into the fire once again. The pellet fuel fire this time around, that is. Recent announcements from the headlines say that Otten plans to open and develop a business providing pellet stoves and fuel to homeowners around Maine. His 10 million dollar investment brings to life a new company in Maine called Maine Energy Systems. The intent of this new venture is to import pellet fueled heating systems from Europe, where wood pellets have been popular for a good many years, and convert older systems and/or install new ones, while at the same time developing a fuel delivery aspect to the business.

According to a couple of sources, his goal is to have at least 10% of the Maine market converted to pellet fuel within five years. A noble goal, but is it possible given the volatility of the fuels markets? I remember when oil spiked during the 70’s and woodstoves became almost impossible to acquire due to the skyrocketing demand. There are a lot of good things to be said about using pellets for fuel, but there are some equally not so good points as well.

In looking at the history of fuel prices and current trends, it doesn’t look like the price of oil will be declining to any great amount in the near future. Eventually, if the market demand evens out and the US dollar starts to rebound in value, we may see some decline, but I’m betting it won’t drop below $100.00 US per barrel again. Unless something really huge, and really unexpected happens in the OPEC cartel, or the Feds decide to allow drilling in Anwar or on the outer shelves.

Keeping this fact in mind, it is probable that the demand for alternative fuels will continue rising, and at some point, the market for these fuels will make a correction, and prices will start to climb as supply diminishes. It’s the old rule of supply and demand. It affects every product ever thought of to sell by mankind. The principle works the same for milk and bread as it does for the oil we rely upon so heavily from countries that really do not care for us, or the freedom we love.

So what is this pellet fuel, and how much does this stuff cost? First of all, we are talking about wood pellets. These pellets are generally made from wood that is leftover from other processes, or simply doesn’t meet the criteria for any other use. It’s generally referred to as waste wood. About the size of a pencil eraser, the pellets burn cleaner, and more completely than solid wood. This means less creosote in the chimney, and the units themselves run so cool on the outside that I’ve read of dealers that keep a stack of newspapers on top of them to demonstrate the safety of the units. The pellets generally are available in 40 pound bags which are sold individually, or on a pallet by the ton price.

Currently, the price averages somewhere between $240 to $250 per ton, and it is estimated that with a central heating system like Otten will be selling will consume six to eight tons per year for heating purposes. That puts the high end of operating cast at around two grand a year. Compared to oil for heat you’d be looking at about two tanks of fuel, or less at today’s price for oil.

Is it worth the cost to switch over? Maybe, maybe not. That would depend on your financial status and whether you can have a pellet stove or not in the first place. Pellet stoves are prohibited from manufactured housing per federal regulations, so you trailer parkers are out of the picture from the get-go. It’s also difficult to install something like this into a multi-unit dwelling unless it is already set up for central heating, in which case the landlord gets to decide on the heat source.

Then you have to look at the price for an installation and the new equipment. In reading several articles about the pellet fuel situation, the average cost for a pellet stove will run around two to three thousand dollars, while a central system boiler such as Otten will be selling ranges from nine to fourteen thousand bucks. That’s a lot of money just to switch over from one source of fuel to another.

But in the long run, you really need to ask two questions of yourself. The first one, is it really cheaper in the long run? The second one, is it really better for the environment in the long run? Real scientists use the British Thermal Unit, or BTU for determining efficiency of any given fuel. The heat output of #2 oil is about 125,000BTU’s. That’s without any additives or water in the mix. A pound of wood pellets will range from eight to nine thousand BTU’s, depending on moisture content. That is decidedly in favor of the oil. Pound for pound, #2 oil outweighs the wood pellets in every way.

But we have to deal with something called money in the real world, and that is where the big difference in value comes into play. Unless heating oil drops back below $3.00 per gallon and stays there, wood pellets will become the leader in the argument. The formula is decided by comparing $/million BTU’s. At 9,000 BTU’s per pound, one million BTU’s would equate to 112 pounds of pellets and eight gallons of #2 oil. At a high price of $250 per ton for the pellets, it works out to .125/# or more aptly put, 1250/mill BTU’s for the pellets. Oil would take 8US gallons for 1 million BTU’s. at an average price of fuel pegged at $3.50/gallon, that would equate to 2800/mill BTU’s. No contest. Of course. I’m not very good at math problems, so I may be wrong here.

But at any rate, it’s currently cheaper to heat with wood pellets than oil today. Your decision will more than likely rely upon the costs of conversion for the equipment alone. Average size home units will run around ten thousand dollars, installed according to some projections. As the demand increases the market price will fall as supplies increase. However, if demand increases faster than the equipment can be supplied, we may see a rise in the price of that equipment. Supply and demand, remember?

And in keeping with that theme, if the supply of pellets cannot keep pace with an increasing demand, then the price of pellets will be increasing as well. If, after all is said and done, you have replaced your system with a new pellet unit, and the price of oil plummets, you could end up losing out. A tight supply of pellets coupled with a high cost for installation could end up costing you more than if you rode the storm out with your old oil unit.

The coming elections are bound to have a telling affect on the energy prices we have to learn to live with today. The right choices could give us an administration unafraid of the left leaning people who are afraid to drill for new sources of oil on US soil and on the outer shelves. Doing so would substantially lift the quantity of oil available to us. Couple that with the construction of even one or two new refineries, and we could see the price of gasoline dropping back below the three dollar mark again, and two dollars a gallon for heating oil.

I’m putting my money on the Republican ticket this fall. If you’re not sure where to put your money, click on or the HUCKPAC banner to the left of this article to learn more about how you can help the conservative efforts for elections in this country.

(From Media Daily News)

‘L.L. Bean’ Show Joins Outdoor Channel
Wednesday, May 14, 2008 8:30 AM ET
The 13-episode “L.L. Bean’s Guide to the Outdoors” joins the Outdoor Channel in the third quarter. Outdoorsman Bill Gorman, the great grandson of L.L. Bean, and Tim Rajeff, master fly-fisherman, will co-host the program, which attempts to find the best hunting and fishing locations in the world.

Isaiah 9:4-6 (King James Version)

4 For thou hast broken the yoke of his burden, and the staff of his shoulder, the rod of his oppressor, as in the day of Midian.
5 For every battle of the warrior is with confused noise, and garments rolled in blood; but this shall be with burning and fuel of fire.
6 For unto us a child is born, unto us a son is given: and the government shall be upon his shoulder: and his name shall be called Wonderful, Counsellor, The mighty God, The everlasting Father, The Prince of Peace.

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