Heating oil price increase this winter will be "staggering."

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Long before heating season, shoppers paying a premium for firewood

Long before heating season, shoppers paying a premium for firewood
By Mike Stucka
Staff writer


July 05, 2008 06:00 am



The North Shore is baking in the summer sun, but for many, winter isn't far from mind, according to firewood sellers, who say rising oil costs are driving demand for logs — and driving up their price, too.

"I think people are trying to plan ahead," said Jim McKechnie, owner of Wolf Hill garden centers in Ipswich and Gloucester. "I do believe people are worried about how they're going to pay for their oil."

McKechnie's customers are buying firewood and wood pellets, and they're paying more than they used to. Semi-seasoned wood now sells for $328 a cord, up from about $220 last summer.

While Yankee Fireplace & Grill City in Middleton would normally sell plenty of grills around the Fourth of July, customers are instead getting ready for winter.

Wood "pellet stoves are pretty much bonkers right now," said C.T. Watt, a Yankee Fireplace site surveyor. "A lot of manufacturers are telling people if they order now, they may not get them until February."

Even though it isn't the heating season, oil and wood prices are higher than they were in the winter, and even thieves are planning ahead. On the cusp of the worst heat wave, someone stole logs from Peabody's Quality Firewood — then returned a week later to steal more, the owner told police.

"They'll do it through the summer, too, so they'll have a couple cords for the winter," said owner Ron Coy, who starts his mornings walking around to see how much wood was stolen overnight.

Coy said suppliers can't keep up with demand, and prices are rising quickly. He sometimes goes a few days without any wood to split and get seasoned, and parts of his yard are empty.

"Guys don't want to come to me because fuel is $5 a gallon," Coy said. "And they're in southern New Hampshire. What's next? Beyond that is Maine and Vermont."

Typically, the wood is being burned in stoves and fireplaces to supplement a building's regular heating system, which typically runs on heating oil or natural gas.

Beth Hogan, executive director of the North Shore Community Action Programs, said wood and other alternatives are options only for suburban homeowners, who will also get crunched by oil prices.

"I think we're facing an emergency, and we need to start talking about it now," said Hogan, whose agency oversees heating oil assistance programs.

A NewEnglandOil.com survey shows heating oil prices were averaging $4.41 a gallon in late June. The federal Energy Information Administration said Massachusetts heating oil prices rose 70 cents a gallon just between February and April. The agency said natural gas prices were higher in April than they were during the core winter months, though the April prices were close to those in 2006 and 2007.

With oil prices going up, supplements like wood and wood pellets are in higher demand.

McKechnie said semi-seasoned firewood is already more expensive than fully seasoned firewood was in winter. He's encouraging customers to stock up, because prices could go up more and supplies could disappear. Heating customers are competing for wood against paper mills also worried about getting a good supply at a good price. Heating oil is the same substance as the diesel fuel that's gotten much more expensive.

"All of this boils down to the cost of fuel, because to get the logs, to get the firewood down to me, to split it, fuel costs are so high it's just escalating the prices tremendously," he said.

Even with the increased price, a cord of wood still costs about half as much as an equivalent amount of heating oil, he said.

Wolf Hill's Ipswich location has about 225 cords in stock now. On Thursday morning, when temperatures were around 85 degrees, it sold three cords, said bulk yard manager Shawn Roberts.



http://www.salemnews.com/punews/loca...ces_printstory
 
Thanks for posting articles

Good to hear demand for firewood will be strong this fall. Makes me motivated to keep cutting. Very tough to find logs here right now.
 
The prices are not going to go down. Insulation, multi pane windows and 95% efficient heaters are the answer. I heated with wood for 25 years as the only source of heat for the house. A couple of years ago we installed a central propane furnace. Now I am back to mostly wood.

A couple of months ago a friend predicted $200 a barrel by the summer of 2009. He is looking less "crazy" by the day.
 
Yah know what? The Saudis are flooded with so much of our money for oil now, that they are 'suffering' from double digit inflation there. Doesn't it just make you want to cry? Poor babies... :cry: :clap: :cheers:

BTW, the price of gas in Saudi Arabia is a whopping $0.45 a gallon. Here (north coast of CA) a whopping $4.79 a gallon... :mad: :mad: :mad:
 
Luckily 2 years ago I replaced my Central AC with a 13 SEER Heat Pump with
a fossil fuel kit that kicks the Heat Pump out at 23 degrees and brings in the
oil furnace instead of using electric heat strips. I've bought 100 gallons of oil
between the last 2 winters and I still have quite a bit. I can heat my '59 ranch
style home, 1900sq.ft. for about $1.00/day. I may drop my outdoor
thermostat even lower because I was still getting 83 degree heat, out of
registers, at 24 degrees outside. I'm still amazed that I can heat my home
comfortably to 69-70 degrees for a $1/day.

What kind of heat pump is that? Air to air, ground water, or what? Seems to make a lot of sence though, having a heat pump.
 
July 9 (Bloomberg) -- Crude oil rose, rebounding from its biggest decline in three months, after Iran test-fired a long- range missile capable of reaching Israel and the dollar fell.

Oil recovered as the Iranian exercise, reported on state television, heightened concerns of an attack by Israel on the Middle East's second-biggest oil producer. The dollar dropped against the yen and euro after the missile test, making commodities priced in the U.S. currency cheaper.

``While we're still in a phase of verbal attacks, the danger of military strikes is real and Iran might halt its oil exports,'' said Gerrit Zambo, a trader at BayernLB in Munich. ``This is driving the oil price up and the situation remains tense.''

Crude oil for August delivery rose as much as $2.24, or 1.7 percent, to $138.28 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $137.67 at 11:15 a.m. London time. Yesterday, prices tumbled 3.8 percent, the biggest decline since March 31.


Draw your own conclusions.
 
Yea, I saw the missle thing on the nightly news and figured that a new record high for oil was not far off. Its always something or as my grandfather said the other day "somebody in the middle of no where throws a rock at a refinery and the price of gas and oil goes up"

On a related note, I was listing to the radio while working out in the yard a week or so ago. I didn't hear the hole thing but the host was saying that the United States is the # three top oil PRODUCING nation. He was also saying that all the oil that they are waiting to drill out of the protected areas in Alaska is already contracted to be sold to Japan. Does anyone know if there is any truth to either of these claims?
 
USA is worlds #3 oil producer at 8 million + barrels

a day. The problem is that Americans consume over 20 million barrels a day and do not have significant reserves to sustain current production for much longer - something like 12 years.
 
a day. The problem is that Americans consume over 20 million barrels a day and do not have significant reserves to sustain current production for much longer - something like 12 years.

There is more shale oil in the U.S. and oil sands in Canada than there ever was in Saudi Arabia. Yes, it costs more to extract it (it needs $30-40/bbl to make it worthwhile). Yes, it will require new technologies to get to a lot of it, but then today we are reaching deep sea oil that was unreachable five years ago.

During the 70's, we started to get serious about shale oil. Suddenly the price of oil dropped and those projects were scrapped. Was it coincidence, or did the Arabs intentionally drop prices so as to keep us tied to their apron strings and destroy the shale oil industry?

Ken
 
There is more shale oil in the U.S. and oil sands in Canada than there ever was in Saudi Arabia. Yes, it costs more to extract it (it needs $30-40/bbl to make it worthwhile). Yes, it will require new technologies to get to a lot of it, but then today we are reaching deep sea oil that was unreachable five years ago.

During the 70's, we started to get serious about shale oil. Suddenly the price of oil dropped and those projects were scrapped. Was it coincidence, or did the Arabs intentionally drop prices so as to keep us tied to their apron strings and destroy the shale oil industry?

Ken

I remember reading about the shale oil enthusiasm back in the mid 70s. All very glowing regarding the potential. But then I read a very sober analysis that spoke of the enormous energy inputs required to extract it. That problem apparently was manageable, barely. The real difficulty with shale extration is water. There is simply not enough water available for the processing involved in the places shale ocurres.

Regarding oil sand, huge energy and water inputs are also required but in northwestern Canada where most of it is located they do have the water. The industry is going great guns there. They are ripping up thousands of acres digging that stuff leaving behind an utterly ruined wasteland. Oil sand stocks have been a very good investment. It still ain't enough.
 
Exactly - $30-40 - not $130-140

Yes, it costs more to extract it (it needs $30-40/bbl to make it worthwhile).
Ken

Current price levels are not here to stay. As soon as economy gets bad enough OPEC will incease supply to drop price. Too bad we all have to rely on countries like Iran/Iraq/Kuait to determine how much we pay for energy when we have all that heavy oil sitting in the ground on North American soil.
 
I feel confident that with oil at $100-300/bbl and ten years lead time, we can develop practical technologies for shale oil extraction. Like I said, what they are doing today with deep sea wells was impossible 2-3 years ago and just a fantasy ten years ago.

There is no shortage of oil, just a shortage of cheap oil. Of course the U.S. economic policies (devaluing the dollar) jacks up the price foreign oil.

There was a front page article yesterday in the Wall Street Journal about a whole region in northern Iraq that is untapped and mostly unexplored. The front page had a photo of a pool of oil that had bubbled to the surface!

Ken
 
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Self Sustaining Energy Supply

The way that I look at it is that even if there is some moderation in the future for crude oil prices I would rather insulate myself from the market and use my own resources (the woodlot I own) to provide my heating. If the oil prices go down in the future then I guess I haven't saved as much as I had hoped but I am still saving money, if the oil prices go up then I've saved even more money than I had hoped. Either way I'll save money so in my mind it is a win-win.

And to stay on topic I just called the local co-op and heating oil is $4.25/gallon here in southern Michigan.

Now if I could just figure out a way to get the land to fuel my car I'd be a happy camper. :)
 
Current price levels are not here to stay. As soon as economy gets bad enough OPEC will incease supply to drop price. Too bad we all have to rely on countries like Iran/Iraq/Kuait to determine how much we pay for energy when we have all that heavy oil sitting in the ground on North American soil.

We can hope but I doubt that oil will drop that low. If indeed Saudi Arabia is past it's prime, they will probably keep prices high to maximize their total income.

Also, don't forget that the dollar is only worth half of what it used to be vs. other currencies. If oil drops to $30-40 in terms of the old dollar, that still means $70/bbl oil. Government spending and printing funny money is responsible (irresponsible?) for half the price increase of oil.

Ken
 
Oil man in Texas is going to be putting his resources (billions) into wind power from Texas to the Canadian border- a virtual wind alley which by his calculations would knock off 21% of the natural gas total we use a year to generate electricity nationally! Boy, do the alternative energy lobbyists in Washington need help, or what! :dizzy:
 
Oil man in Texas is going to be putting his resources (billions) into wind power from Texas to the Canadian border- a virtual wind alley which by his calculations would knock off 21% of the natural gas total we use a year to generate electricity nationally! Boy, do the alternative energy lobbyists in Washington need help, or what! :dizzy:

There is massive government subsidies for wind power. I suspect T. Boone Pickens is planning on making a couple of more billion from that.

Anytime government manipulates the real markets there is waste and political favor. Look at the corn/ethanol fiasco.

Although I like the idea of wind for supplemental energy, I don't think it has the potential to make a big difference in the overall situation. I just read where in Europe they are taking massive amounts of wind power offline because it is too unreliable ("Germany's electric rates are going up and there is a possibility that 6000 mw of electric power from wind will be taken off line. The article sited some unpredictablity in wind output as the reason.")

What happens on a windless subzero night when people need heat? Keeping standby fossil fuel plants sitting idle 99% of the time is extremely expensive. You know who would pay for that.

I do have a simple solution to significantly reduce gasoline usage and bring oil prices down: outlaw automatic transmissions in cars and trucks. That would save 10-20% of our gasoline usage without waiting for some new technology. It would also reduce pollution. Of course, I'm willing to bet that nobody is willing to do that. The politicians would rather curry cornbelt favor while lowering fuel economy (ethanol reduces miles per gallon).

Ken
 
I feel confident that with oil at $100-300/bbl and ten years lead time, we can develop practical technologies for shale oil extraction. Like I said, what they are doing today with deep sea wells was impossible 2-3 years ago and just a fantasy ten years ago.

There is no shortage of oil, just a shortage of cheap oil.

Ken

There's certainly incentive for this now. Market forces at work. Just sucks that the little guys get pinched in transitional periods.

But, if I had a billion dollars and was looking to invest in extracting from shale, I'd make sure to do my homework first. If the economy skids into a major recession or a global depression, the bottom could fall out (figuratively) from that $140 bbl of oil, making my shale venture a very expensive mistake.

But my hats off to anyone exploring alternative sources of energy - an embodiment of America's enterprising spirit.:clap:
 
Some in U.S. replace oil heat with wood stoves

Some in U.S. replace oil heat with wood stoves
Fri Jul 11, 2008 9:32am EDT

By Jason Szep

BOSTON (Reuters) - It's summer in the United States, but many Americans are already fretting about winter.

Record prices for home heating oil are rippling across America's northern regions, stoking demand for wood stoves and other alternatives, and forcing some heating oil companies out of business.

In New England, which has the nation's highest rates of heating oil use, homeowners are bracing for a near doubling in the cost to fill home oil storage tanks compared with last year.

The surging cost has spread alarm among heating oil distributors, mainly small and often family-run businesses. Their profit margins already squeezed, they now face the prospect of taking on unprecedented amounts of debt to buy fuel for winter.

"It's cutting into us really deep now," said Ray Scarfo, president of Ranco Fuel, a 33-year-old family-run business in Medford, Massachusetts. "We don't even know if we'll even have a heating oil business when it comes to next winter."

Three heating oil companies have failed since March in Connecticut. Vermont is creating a task force to help residents deal with rising heating oil and gas prices, and from Maine to Minnesota authorities are warning residents to prepare for a surge in the cost of staying warm.

On July 9, the governors of Maine, Massachusetts, New Hampshire and Rhode Island called on Washington to increase the region's home heating assistance to $1 billion from $252 million last winter.

"This is a human catastrophe coming at us in the state of Maine in terms of energy supply and costs," Angus King, the state's former governor, told a recent alternative energy industry gathering. Maine has the highest rate of heating oil use in the nation, with about 87 percent of homes using heating oil or kerosene.

King said he expects the cost to fill a typical family's heating oil storage tank in Maine could top $1,000 this winter, double last year's cost, following a recent spike in heating oil prices above $4 a gallon. Other estimates put the cost at about $800, up 60 percent from last year.

"Most people are going to have to fill up that tank six times," said King. "How is somebody who is making $350 or $400 a week going to pay to fill up the tank to keep warm?"

New England pays more for energy than the rest of the nation because of its reliance on fossil fuels such as oil and natural gas extracted from distant states and countries.

The Massachusetts Oilheat Council estimates that heating oil prices in New England are now around $4.65 a gallon, up 116 percent since 2005. It expects prices to keep rising as the market tracks record-high crude oil prices.

Many homeowners are searching for alternatives to oil. Sales of wood-burning stoves -- in use since before American independence from Britain -- are brisk, even as customers don shorts and bask in summer weather outside.

"Demand for wood pellet stoves has tripled. We're pre-sold out until probably the New Year," said Tim Bushey, manager at Frost & Flame in Gorham, Maine, which sells wood stoves and stoves that burn wood pellets.

"Right now we have over 300 wood pellet stoves sold and almost 800 tons of pellets," he added.

Wood pellets are usually made from compacted sawdust. The Pellet Fuels Institute, a trade body for the U.S. wood pellet industry, said manufacturers are expanding capacity to meet growing demand.

"Could there be an unprecedented run on pellets? I don't think that's out of the question. But I think things are happening early enough in the season that certainly our manufacturers will have the ability to ramp up their production as needed," Bushey said.

GRIM ECONOMICS

The economics of the heating oil business look grim for the typical New England distributor, which supplies about 2.5 million gallons of the fuel each winter, with about 20 percent delivered in January alone.

A decade ago, when heating oil prices averaged around 50 cents a gallon, they needed just over $1 million to buy the fuel wholesale. That was fairly easy to finance given the stability of the business during New England's harsh winters.

Now, to buy the same 2.5 million gallons at current prices of more than $4 a gallon, the cost is 10 times higher at about $10 million, a significantly harder amount to borrow. For some, their entire business is not worth that much, making it difficult to produce the collateral needed to secure a loan.

The weakening economy also means customers are taking longer to pay bills, further straining cash flow.

"Quite simply, their wholesale costs are outpacing their credit lines," said Matt Cota, executive director of the Vermont Fuel Dealers Association, which represents 125 companies in Vermont, where 75 percent of residents depend on deliverable liquid fuel such as kerosene and heating oil.

"Also our dealers are selling 15 to 20 percent less than they did previously as people here in Vermont supplement their heat with wood, chopping down trees in their backyard in order to do a little parlor stove," he added.

"So as a dealer you are faced with this reality: you are going to sell 15 to 20 percent less product this year yet you have to go to your banker and ask for two times more money. That's a problem," he said.

Some states fear that heating oil supplies could be disrupted if companies fail during winter, leaving families with few alternatives for heat in remote regions.

Massachusetts Sen. John Kerry and Maine Sen. Olympia Snowe have proposed legislation to allow businesses hurt by rising heating fuel costs access to "economic-injury disaster loans" at subsidized rates until they can get back on their feet.

That could help in Connecticut, where three companies that sell heating oil have gone out of business since March, said Eugene Guilford, executive director of the Independent Connecticut Petroleum Association, an industry body.

"We're going to begin meetings to determine whether it would be possible to have some state and federal resources put together to provide some additional borrowing power," he said.

Some heating oil companies are already selling solar power, wood pellets and wood-burning stoves, along with natural gas, he added, but others cannot switch business models quickly enough while costs are high.

"Diversifying your product lines means you are prepared to undertake a capital outlay. And maybe some are not in that position," he said.

(Reporting by Jason Szep; Editing by Eddie Evans)

http://www.reuters.com/article/domes...rpc=22&sp=true
 
Logs in RI are getting hard to find as well. The money for wood guys is in cut and split wood. Near $225 a cord for nice seasoned stuff right now. Down at Cape cod it's over $300.00 per cord because of the travel and fuel costs.
 
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