Firewood Supply/Demand Price increase next year??

[BPS. LLC]

It seems like the economy has hurt the local logging industy here. Not that its very big here anyway, but I a buddy that is an owner operator of a grapple truck and he said he is only working one two days a week hauling to the paper mill. He mostly hauls for tree services and land clearing companies.

Another friend that has a tree service is slow, but steady. He has about a weeks worth of work ahead of him, where a few years ago he had several weeks, at least over a month.

I think, at least in my area that there will be firewood shortages for the next burning season. There will always be guys that cut their own...but for the breed of people that buy wood, I think it is going to be more difficult and more expensive overall.

I have a few reasons for my theory. The slow logging industry in the area. The guys have talked to say they are slower this year than they have been in the last decade. Also, I'm sure there has been a surge in wood stove sales because of the tax credit. There's going to be a bunch of new people burning wood next year. Finally, electric gets deregulated in my area for next year. When people get the sticker shock of 50-70% electric rate increases like they did in Maryland, they are going to start burining more wood. And finally, fuel costs are going up again.

These are just my opinions, feel free to tell me how wrong I am...the guys that cut their own obviously won't be effected, but I'm thinking this could be good for the "commercial firewood producer" in my area. I used to have lower prices in the late summer. I think I'm going to maintain my price and possibly tack on a small delivery fee.

 

[branchbuzzer]

That seems like sound reasoning on the points you're making, but there are also counter pressures as well.

The logging industry is hit hard, lots of guys get laid off. They know how to run chainsaws, so they start selling firewood instead. That goes for all other unemployed workers as well, since firewood money is generally under-the-table for small timers and an emergency way to make cash. It's not exactly rocket science, so almost anybody can at least try it.

How about the tree service guy who normally views firewood as "too much trouble" or "not worth their time". The slower their business gets, the better "firewood on the side" starts to look to them.

How about those 'firewood buyers' you speak of? The same reasons that people aren't buying cars/homes/and everything else can be reasons NOT to buy firewood and cut their own instead, i.e. they're short on cash. So while some people are buying wood to save money on heating bills, some are also trying to find their own wood instead of buying - and if they're unemployed they've got plenty of time to look. Then think about workers who are unemployed but not looking, the so-called "real" unemployment rate. While obviously they're not all doing firewood for money, some of them are, and not all of them are "hacks".

One good thing for sellers is that fossil fuels remain high, so that firewood gets to be a better and better alternative comparatively. Eventually this should increase prices in theory. Most other fuels respond to a price increase in another because demand picks up for the cheapest option. If you've ever watched energy commodity prices, you'll see traders trying to anticipate that. It takes time for end users to shift to another option though.

I think the main thing in the end just comes to down to the economy and unemployment. When/If it picks up, so will prices. If people have jobs, they have money, they buy. Less people out of work means less small-time sellers.

 

[BPS. LLC]

That seems like sound reasoning on the points you're making, but there are also counter pressures as well.

The logging industry is hit hard, lots of guys get laid off. They know how to run chainsaws, so they start selling firewood instead. That goes for all other unemployed workers as well, since firewood money is generally under-the-table for small timers and an emergency way to make cash. It's not exactly rocket science, so almost anybody can at least try it.

How about those 'firewood buyers' you speak of? The same reasons that people aren't buying cars/homes/and everything else can be reasons NOT to buy firewood and cut their own instead, i.e. they're short on cash. So while some people are buying wood to save money on heating bills, some are also trying to find their own wood instead of buying - and if they're unemployed they've got plenty of time to look. Then think about workers who are unemployed but not looking, the so-called "real" unemployment rate. While obviously they're not all doing firewood for money, some of them are, and not all of them are "hacks".

One good thing for sellers is that fossil fuels remain high, so that firewood gets to be a better and better alternative comparatively. Eventually this should increase prices in theory. Most other fuels respond to a price increase in another because demand picks up for the cheapest option. If you've ever watched energy commodity prices, you'll see traders trying to anticipate that. It takes time for end users to shift to another option though.

I think the main thing in the end just comes to down to the economy and unemployment. When/If it picks up, so will prices. If people have jobs, they have money, they buy. Less people out of work means less small-time sellers.

Good points. The good thing for me is my customer base. I am 3 miles inside Pennsylvania. 85% of my sales are in MD, which has 5 of the 10 richest counties in the US. Where I sell most of my wood, these people wouldn't consider picking up a saw to do any kind of manual labor. In fact I am surprised they burn wood period. They seem immune to the economic issues. They still have their pool guy, lawn guy, house cleaner, etc. I have one couple that has a live in "nanny" for their kids. She practically raises the kids, pays their bills, runs their errands...must be nice. These are the same people that will bicker about a small delivery fee and/or fee increase, though.

There does seem to be a lot more people on CL trying to sell firewood lately...

 

[Erock]

You're figures are probably right about the increasing LP and electric costs. My thoughts are that people are either not motivated enough to cut and split and stack and season their fire wood. Or, they'll get everything to get started on wood heating and realize it's more work than they realized and will abandon the idea.

I hope the number of wood burners doesn't increase as I think it will not be as special if everyone is doing it. Not sure if you guys feel that way about it too or not.

 

[BPS. LLC]

You're figures are probably right about the increasing LP and electric costs. My thoughts are that people are either not motivated enough to cut and split and stack and season their fire wood. Or, they'll get everything to get started on wood heating and realize it's more work than they realized and will abandon the idea.

I hope the number of wood burners doesn't increase as I think it will not be as special if everyone is doing it. Not sure if you guys feel that way about it too or not.

My only worry is the more wood burners brings more regulation. And of course, the more we regulate, the more we pay.

 

[branchbuzzer]

You're figures are probably right about the increasing LP and electric costs. My thoughts are that people are either not motivated enough to cut and split and stack and season their fire wood. Or, they'll get everything to get started on wood heating and realize it's more work than they realized and will abandon the idea.

Lack of money is usually a strong motivator - and cutting your own wood is a way for those out of work to "at least do something" to make/save money.

I hope the number of wood burners doesn't increase as I think it will not be as special if everyone is doing it. Not sure if you guys feel that way about it too or not.

My only worry is the more wood burners brings more regulation. And of course, the more we regulate, the more we pay.

Well, look at it this way. Think about how much demand would increase for other energy sources, including gasoline and electricity ( and the resulting increase in price for us "special people" ) , if nobody was burning wood.

 

[blackdogon57]

BPS - Your reasoning is bang on. Firewood logs are a by-product of logging operations. When logging operations slow down the supply for logs dries up fast. I buy in large quantity and some years it is difficult or impossible to buy enough logs.

 

[D&B Mack]

I think firewood sale prices will go up next year with the above listed factors. But also the suppliers costs are going to go up as well, just depends on the final ratio. But with gas expected to hit $3.50 for the country average and insurance costs increasing, that alone will take a bite out of profits.

 

[mga]

question.....

do mills pay more per truck load than if some one was to buy one?

in other words, would there be more money to be made selling logs to firewood processors when mills are slow?

or, if mills are that slow, is there a big enough market for them to process firewood?

 

[D&B Mack]

The guys that buy logs from us, say the pulp mills are still buying as usual. But for the more valuable wood, I would think they would hold the wood until the Mill is buying again. I can't imagine a firewood processor would pay that much for a load, if he is reselling. Maybe a homeowners doing it for themselves might, but don't know.

 

[hermit]

One other thing, The towns,cities,counties and states are looking for new revenue. So sales tax, permits may start looking good. I know not long ago we didn't pay sales tax on mini-storage, now we do. No one pays tax on wood sales, except some may claim income and pay income tax, although I doubt many do.

 

[Swamp Yankee]

Tough Question

Let me preface my thoughts by saying what I see is based upon the local market here, or in short YMMV.

Wood supplies are available but it seem to be spotty, almost a feast or famine situation. I still have feelers out for tops, etc. and will buy if offered a decent price. Right now 7 to 8 cord triax loads are $800 give or take. I try to buy skidded into the landing and that rate right now is $60 to $70. I really don't see prices for wood supplies moving much. Several of the bigger operations are cutting back on what they buy because of the artificially low retail selling prices. Let's face it, who wants to spend $70 for the wood,then process and deliver for $150.

As to selling price, it can only go up when the economy picks up a bit and the short time hacks go back to from where they came, and stop advertising prices for $50 less than the reputable guys. Even though they're supplying short cords of lousy wood, people see the price in the local papers or CL and think the reputable guys should price match. This situation hasn't really hit me too badly as I'm a small timer. Most of my customers are regulars and are staying with me after learning their lesson in the past about getting what you pay for.

So in a nutshell, from my view, things look to be in a holding pattern for at least another year.

Take Care

 

[Ambull]

I think the main thing in the end just comes to down to the economy and unemployment. When/If it picks up, so will prices. If people have jobs, they have money, they buy. Less people out of work means less small-time sellers.

In bad economies, the price of anything labor intensive goes down. Firewood is labor intensive. Just too many people out there right now willing to sell cheap. In PA for the meantime there are plenty on trees to cut.

 

[indiansprings]

I thought firewood prices might go up here this year as a result of low timber prices and the down sizing of how much oak logging is going on. WRONG!
It seems that everyone that owns a chainsaw is in the wood business this year. There are more sellers than ever due to unemployment. When delivering
I see more wood stacked up in yards along the highways with signs for 30-35 dollars a face cord. A couple of the loggers are in the business this year.
Sawmills are selling bundles of slabs for 10.00, which will cut up in a face cord. We've been busy with our normal customer base, but have not gained any new customers. A couple of our customers are having a hard time even coming up with the cash to buy wood. I delivered to a single mom last night that normally will buy 6 cord a year, she says she dosen't know how she will heat the house this year, I told her just call, we'll worry about getting paid later, can't stand the thought of cold kids. The markets at 35.00 a face cord here this year delivered, we hoping to see it move to 40-45 so there would be a little more profit.