Whether or not pellet prices are going up or down is a very hot topic these days. As the cost of energy continues to rise, the demand for heating oil is also soaring. And with the COVID pandemic in full swing, the demand for energy is outstripping the supply.

Demand is outstripping supply

Increasing demand in Europe for home-heating wood pellets has outstripped supply. Prices have skyrocketed, and there are now record spot prices. The supply is expected to be short this winter, which could lead to more record prices.

The European market is dominated by the Scandinavian countries, Denmark, Finland, Sweden, and Norway. Germany, Italy, and France are also major consumers. In addition, the EU government is driving incentives for renewable energy production.

The EU’s directive on renewable energy is one of the main drivers behind the transatlantic trade in wood pellets. The US has been supplying 40% of the industrial wood pellets consumed in Europe. The Southeast US has been the largest external supplier of wood pellets to the EU. However, the availability of raw material is limited and the manufacturing conditions are less favorable.

According to John Crouch, director of public affairs for the Fuel Pellet Institute, the U.S. has the capacity to produce more than a million tons of wood pellets per year. He expects the industry to grow by 17 percent annually through 2021.

He notes that the US has a more favorable manufacturing environment than Canada, which has less developed roads and ports. Georgia has a well-established harvesting infrastructure and local government support. The SE US’s temperate climate, known as the “woodbasket,” supports rapid regeneration of forests.

Despite the fact that the SE US supplied more than 40 percent of the industrial wood pellets consumed in Europe, there are still challenges to meet European demands. The availability of sawmill residues and roundwood is less than optimal, and a weak housing market has resulted in a shortage of raw material.

There are also concerns about the potential impact of bad actors in the supply of fiber for sawlogs and other uses. These threats may slow the development of the EU’s export market.

COVID pandemic

Several industries, including the forest-based sector, have been affected by the COVID-19 pandemic. However, the impact was short-lived, and the global economy should return to normal soon.

The pandemic aggravated pre-existing issues in the supply chain. Raw material availability was an issue during the first few months of the pandemic, but the lumber industry has been able to recover quickly. This helped to ensure a steady supply of wood pellets.

Although the pandemic was relatively minor, it did affect the Canadian wood pellet industry. Some new projects were delayed due to travel restrictions, and equipment providers were unable to transport their equipment to the new sites.

The COVID pandemic has also affected the price of pellets. A survey conducted by ENplus found that a majority of producers plan to decrease prices in the coming months. This is likely to result in a difference of up to 20 percent between the price of pellets and what the end users would pay.

The survey was conducted among 93 certified companies across 21 countries, and aimed to gather data on the current impact of the coronavirus on the market for high-quality wood pellets. It was also expected to provide insight into any future fluctuations.

In the United Kingdom, a government incentive scheme called the Renewable Heat Incentive (RHI) was introduced in April 2013, which caused a large amount of interest in the pellets market. During the first six months of the pandemic, a substantial increase in pellet burners in domestic homes, as well as a spike in pellet imports, contributed to an initial increase in pellet prices.

Pellets are mainly produced from wood residues, byproducts of traditional forestry operations. They are primarily used in electricity generation, but can be used in commercial heating as well. They are manufactured by thermally upgrading the wood residues into pellets.

Rising energy costs

Increasing energy costs for pellets could sway demand to other sources. The pellet industry has grown in recent years, fueled by increased demand for wood products. Specifically, the wood pellet market is expected to grow five to six times by 2020.

While the cost of making pellets is a low-margin business, the price of a wood pellet can often be determined by the cost of its feedstock. A recent study examined the cost of shipping various types of wood pellets from the United States to selected ports in the SE US. They found that between 2007 and 2018, the transport costs for a Handysize ship ranged from 10 to 31 EUR/t pellets.

A similar study found that shipping costs fluctuated with changing market conditions. However, the variation for individual components was larger. The costs indexed using economies of scale factors.

The best pellets require the best raw materials. A new report estimates that the global biomass market will grow to more than 60 million metric tons by 2020. While demand is rising, prices have not risen as quickly as expected. The price of Douglas Fir pellets, for example, has soared from 107 EUR/t in 2015 to 137 EUR/t in 2016.

One of the major factors affecting the cost of producing wood pellets is the availability of feedstock. The price of the feedstock depends on the availability of the material, as well as the local market.

The cost of transporting feedstock to the pellet plant is another factor that has a bearing on the cost of generating a tonne of pellets. In addition to the costs of fuel and electricity, the availability of rail infrastructure will also play a role. The cost of installing and maintaining the track will vary based on the type of track and the contractor.

Stockpiles in the U.S.

Historically, the United States had a strategic national stockpile. The purpose of this emergency medical supply was to ensure the availability of critical medical assets in the event of a catastrophic event. The stockpile was initially administered by the Centers for Disease Control and Prevention (CDC), but the Department of Health and Human Services (HHS) was later given responsibility.

Currently, the Secretary of HHS, in coordination with the Department of Homeland Security (DHS), maintains the bioterrorism stockpile. The stockpile is stored in secret warehouses across the country and can be drawn upon at the direction of the Secretary.

The stockpiles are designed to provide short-term buffers to ensure the health of children and vulnerable populations. The team works around the clock to prepare for emergencies. It is also responsible for managing the Strategic National Stockpile.

Several types of medical equipment and psychotropic medications have been suggested as potential stockpile items. In addition, Congress has periodically asked the department to reexamine the inventory. The Senate Appropriations Report from 1999 requested that the department articulate a long-term strategy for the stockpile.

The Public Health Security and Bioterrorism Preparedness and Response Act (PAHPRA) strengthened BARDA’s role in the procurement and distribution of CBRN countermeasures. It also addressed transparency requirements relating to the annual revision of the stockpile.

The Division of Strategic National Stockpile has been working to expand its managed inventory and push-package capabilities. This has included expanding the number of federal medical stations, developing a Cities Readiness Initiative, and providing funds for pandemic influenza MCMs.

In order to fulfill its responsibilities, the Office of Assistant Secretary for Preparedness and Response (ASPR) coordinates with other agencies to procure SNS products. It also co-leads the SNS annual review process. This includes a content review, business process review, and coordination with the PHEMCE multiyear budget. The SNS also relies heavily on input from senior leaders and subject matter experts.

Alternatives to heating oil

Choosing an energy efficient home heating system is a great way to reduce your carbon footprint and the energy bill that comes with it. One of the easiest ways to do this is by switching to renewable fuels such as biomass, hydropower, and geothermal energy. Although these types of systems are more expensive up front, they pay for themselves in the long run.

As you may have guessed, electricity is the most common form of heat in the United States. A well designed home heating system should have a life span of around twenty five years, or more, with a bit of care and maintenance. Its benefits include lower energy bills, greater comfort, and the novelty of being able to choose your own heat source. The drawbacks include the inconvenience of being without power in the winter, and the likelihood of running out of fuel. The most effective alternative is to rely on renewable fuels and to switch to a company that uses a combination of these fuels.

In the northeastern U.S., 2.9 billion gallons of heating oil were consumed in 2018. With a spike in prices, some homeowners are looking for the green light to go. Fortunately, there are plenty of options out there. In fact, some companies even offer same day delivery. And if your system is relatively new, the chances of having problems are low. Those who are in the market for a new heating system should take advantage of these companies’ special offers. They also have a wealth of information and advice on which type of heating system is best for their home.

In addition to these companies, there are a number of smaller regional and local firms who can provide a personalized solution for your home. Some even offer a free no-obligation quote. Using the services of a company such as these can be the best way to start the search for a new home heating system.