10 Questions for . . . Jon Strimling, President of WoodPellets.com
In this installment of 10 Questions for . . ., Associate Editor Gian Trotta speaks with Jon Strimling, president of WoodPellets.com about the pellet market. Strimling also addresses some of our readers' concerns about wood pellets and their delivery.
Last year there were reports of pellet shortages. What are the prospects for pellet supplies this winter?
We're clearly in a better position now at the macro level than we were last year, when oil prices shot through the roof in May, June, and July and caused a run on pellet supplies. The industry usually has until November to provide enough fuel for a winter season, but last year many people saw prices going up and thought that they should get their pellets early.
The sudden surge in demand was challenging, and there were times last year when one coast or another would go into back order. But the country has never been short of supply; it was just a case of the product sitting in the wrong place. We were able to keep a flow, but pellets were traveling farther and cost of transport was higher.
A fair bit of additional capacity has also become available. Over past few years 20 new mills have started producing pellets in U.S. and Canada, and new capacity has been added to existing plants. This year, a major boost to raw-material supplies consists of lodgepole pines in Colorado and British Columbia. Because of beetle infestations in recent years, there is an enormous quality of dead standing timber being removed for forest-fire mitigation, and the highest-value use of that resource is pellets.
Will all those factors offset the reduction in pellet raw materials from lumber and wood-flooring production?
Certainly, housing starts are down, and that has reduced capacity of some mills that rely on that stream of dry residual wood. But most of the newer mills can employ "green chips" that enable them to continue to produce premium pellets, and in some cases even superpremium pellets. These clean, debarked chips are cut before wood is dried, for example from the lumber cut from side of logs to square them.
How vulnerable are pellet-producing plants to supply interruptions?
Fortunately, production is dispersed among several areas and companies to reduce chance of shortages. Individual pellet-supply facilities can go down, especially if they are linked to a particular lumber mill. The network of 80 to 100 plants is as a whole pretty robust, so if someone goes down, someone else will pick up that volume.
One of our readers noted that when he began using pellets five years ago, pellets were $110 a ton, now he's paying $265. What is your long-term forecast for pellet prices?
It may be that this consumer got a very unusual deal in 2005 through some sort of a clearance event, because that price is much lower than even typical wholesale pricing was in 2005. If you look at when we started this business in 2006, our retail price was right about what it is now. In 2008, pricing went up about 10 percent.
If you go back five to 10 years ago when crude was cheaper, pellets cost less. Wood and pellets are typically moved by trucks that use diesel fuel, which has gone up since then; so there's no avoiding that pellet prices will rise as oil rises, as diesel fuel is an element of pellets' cost. Normally, when the price of oil doubles, it results in an increase in transportation costs for pellets of about 25 percent.
How do sales of pellet-burning appliances affect your demand forecast?
Last year, sales of pellet-burning appliances were up 180 percent. We won't see sales like that repeat this year—probably not until the next spike in oil pricing. But every heating system sold creates an incremental increase in demand, and people who have systems are continuing to use them, even with oil at lower price levels.
What we're seeing this year is that demand for pellets is coming later. There hasn't been mad rush to go out and buy supply, so we're seeing a later buying season with strong demand. There's not a feeling of panic of everyone this year like last year with the continued growth in the industry. Folks with stoves and inserts are telling friends to go out and buy a pellet-burning stove.
What's the difference between premium and superpremium pellets?
The Pellet Fuel Institute just released a new standard for superpremium pellets and is working out the statistical data around the new methodology. Ash level is a major distinction. Premium has a maximum of 1 percent ash content while superpremium has less than one-half of one percent. That's a big deal to a stove owner because you're cleaning your stove half as often.
Other things tested by the PFI include Btu content, length and diameter of the pellets, and durability. The heating value and ash level are of primary interest to a consumer. The range of variation for the heating value can be 10 percent, but ash level can vary by a factor of three. Moisture level is inversely proportional to heating performance also.
Will the proposed modifications in pellet standards affect supply, cost, and quality?
I would not expect that to be a case. There will be some added cost for verification and testing, but that is expected to be less than $1 a ton and is not expected to affect supply. Some producers might actually save money if the new standards improve internal quality control and reduce customer claims and reimbursements.
How important is brand when buying pellets?
People outside the industry thank that pellets are a commodity, but these are solid fuels, which are much less homogeneous than refined fuels like oil or natural gas. So their performance and convenience will vary with quality of things, like ash level. And if people have a bad experience with one brand of pellets, they won't be coming back to that brand.What improvements are being made in pellet delivery?
Most consumers today are still buying pellets in bags. We can deliver to any house today with a truck with a forklift that can run up virtually any driveway and drop it on a skid/pallet. We can move pellets to the back of a garage, but typically don't deliver into homes.
The solution to hauling bags ultimately will be to deliver in bulk to homes. We use pneumatic systems and can run a hose 100 feet from the street to a home's basement or garage.
(The photo shows an in-home storage bin.)
Does bulk delivery generate more undesirable fines, or fine dust, in the shipment?
There are some fines generated in moving in bulk, so it has to be done carefully with equipment that's specialized for the job. But the fines can be managed, and millions of tons of pellets are delivered this way. In pneumatic delivery, you are conveying the pellets and vacuuming the fines as you do so. Any pellet-burning appliance will accept some fines and there are specific standards for these. Proper delivery stays within the range of these parameters.
If a customer sees a lot of fines in a shipments, they should tell the delivery people so they can address that to their satisfaction. Also, if pellets got wet or were damaged in transit, our customers have the right to refuse shipment. Torn bags may occur upon handling or during upon delivery, and we normally would replace damaged bags with good ones.
Essential information: Check out our review of pellet stoves (ratings available to subscribers) and earlier blogs on pellet-delivery systems and apparent theft of wood pellets.
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Shale gas holds promise, but drilling for it is controversial
As we covered in Buzzword: Shale gas, this natural gas contained within fine-grained, sedimentary rock is a topic of much interest for the energy industry. There are vast reserves of shale gas nationwide, and energy companies are working hard and fast to tap these natural-gas sources through what's called water fracturing, also known as hydraulic fracturing or hydrofracking. (The graphic below details how hydrofracking works. It was created by Al Granberg and is being used courtesy of ProPublica: Journalism in the Public Interest, a site that features lots of coverage of shale gas and gas drilling.)
As you might expect, there's more to shale gas than the promise of abundant supplies of natural gas and lower prices for consumers. There's also concern that the process used to tap into the shale-gas reserves presents serious environmental and health risks.
Today's New York Times features an interesting story, "Gas Company Won't Drill in New York Watershed," on the decision by Chesapeake Energy not to drill for natural gas in upstate New York after the Oklahoma City-based corporation's plans met with strong opposition. If you're interested in the topic of shale gas, give it a read.—Steven H. Saltzman | e-mail | Twitter | Forums | Facebook
Essential information: If you haven't already, get your heating system tuned up. And to save money on your utility bills, install a programmable thermostat, read our buyer's guides to furnaces (more details here), solar water heaters, and pellet stoves, and follow our overall advice for using less energy at home.
By the Numbers: S&P/Case-Shiller U.S. National Home Price Index continues upward trend
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Current level of the 20-City Composite Home Price Index, part of the Standard & Poor's/Case-Shiller U.S. National Home Price Index, which tracks residential prices in housing markets nationwide. The August 2009 level marks four consecutive months of improved readings and is up 1.2 percent from July, although it is still down 11.3 percent from it was a year ago. The index is calculated monthly and published with a two-month lag.
"While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's, in today's press release. "California, in particular, has seen some real positive prints in recent months." The price index in San Francisco climbed 2.8 percent from July to August, behind only Minneapolis, which saw an increase of 3.2 percent. Charlotte, Cleveland, and Las Vegas were the only three markets whose price index fell from July to August.
The rise in the 20-City Composite Home Price Index comes at a time when the overall economy is expected to show 3.5 percent growth in the third quarter. But, said Blitzer, "We do want to remind people of the upcoming expiration of the federal first-time buyer's tax credit in November and anticipated higher unemployment rates through year end. Both may have a dampening effect on home prices."—Daniel DiClerico | e-mail | Twitter | Forums | Facebook
Essential information: Learn how to buy a foreclosed home and be sure to get a thorough inspection of any property you're considering. After you've moved in, refer to our Kitchen-Planning Guide and Home Improvement Guide interactive.
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EPA proposes tougher lead-paint rules
In conjunction with last week's National Lead Poisoning Prevention Week, the U.S. Environmental Protection Agency has proposed changes to the 2008 Lead Renovation, Repair, and Painting Program.
Contractors renovating, repairing, or painting homes built before 1978 would be required to be trained and certified in and follow lead-safe practices, including minimizing dust, containing the work area, and conducting a thorough cleanup to reduce the potential exposure associated with disturbing lead-based paint. So contractors would no longer be able to opt out of these practices if a homeowner certifies that there are no children under the age of six or pregnant women living in the home.
"This proposed rule will further increase protections for children and their families from lead-based-paint hazards associated with home renovation and repair," said Steve Owens, assistant administrator for the EPA's Office of Prevention, Pesticides and Toxic Substances, in a press release. "The administration is demonstrating its continued commitment to eliminating childhood lead poisoning and strengthening lead poisoning-prevention efforts."
While lead-based paints in homes were banned in 1978, many homes built before then probably have some lead paint. The new rule is intended to help protect older children and adults from exposure to lead, which can cause brain damage and diminished mental and physical development. It should also ensure that families with young children who purchase a recently renovated home aren't exposed to lead-dust hazards.
Another proposed change would require contractors to provide information demonstrating that they complied with lead-safe training and work practices to homeowners when a final invoice is delivered or within 30 days of completion of the renovation, whichever is earlier.
In a related action, the EPA has also proposed lowering lead-hazard standards in lead dust and modifying its definition of lead-based paint. The new standard would be 10 micrograms or less of lead per square foot for floors and 100 micrograms or less for windowsills, down from 40 micrograms 250 micrograms, respectively. Also, paint in existing structures with levels of 600 parts per million (0.06 percent by weight) would be considered lead-based paint. The current level is 5,000 ppm (0.5 percent) or 1 milligram per square centimeter.—Celia Kuperszmid Lehrman | e-mail | Twitter | Forums | Facebook
Essential information: If you're concerned about the presence of lead in your home, read our report on home-use lead test kits. If you discover elevated levels of lead, hire a certified lead inspector or risk assessor. If you're planning to paint or renovate your home yourself, follow the EPA's safe-work guidelines. When you're finally ready to paint, be sure to use the best finishes, like those covered in our latest report on interior paints.
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Inside Consumer Reports Test Labs: Latest tests of string trimmers
As we've found during our current ongoing tests of 26 new string trimmers, including two- and four-cycle gas models, corded and cordless electric trimmers, and even propane versions, the models that offer the highest value are neither the most nor the least expensive.
So if you're in the market for a new string trimmer for next spring or even now—if you live in the Sun Belt you're still likely actively tending to your property, or perhaps you're tending to overgrown areas of your property during fall cleanup—here's what to look for.
One interesting electric model being tested is the cordless Black & Decker NST2036, $250. While 36-volt operation hasn't impressed us when it comes to some cordless drills we've reviewed, during this preliminary testing this model's 36-volt motor and dual-line head seem to provide more cutting power than usual for a battery-powered trimmer, perhaps even enough to rival lower-performing gas models at trimming, including on tougher tall grass and weeds. But at 14.5 pounds, the NST2036 is among the heaviest string trimmers being tested. What's more, a replacement nickel-cadmium battery costs $100. (Visit the Call2Recycle Web site or call 877-2-RECYCLE to find a local recycler of spent rechargeable batteries.)
The heaviest string trimmers under testing—the $210 Lehr ST025DC (right in the picture) and $290 Craftsman 79212 (left)—weigh about as much as the average upright vacuum cleaner. They top off at 16 and 17 pounds, respectively, heavy even without the nearly 2-pound propane tank you'll also have to schlep around your yard.
While propane is supposed to be a cleaner-burning fuel and maintenance on a propane engine should be easier than on a gas one, during initial testing these models have so far proved much harder to start than two-cycle gasoline models. Also, the hose connecting the propane tank protrudes from the trimmer and can bang or catch on anything you brush past.
What's more, whenever you're finished trimming you need to disconnect the fuel line from the propane tank. If you don't, the trimmer might leak, as did one of the two tested Lehr ST025DCs when we forgot to disconnect the line. The user manuals and a sticker on both the Lehr and the Lehr-made Craftsman warn against leaving the tank connected after use, but that important safety step could be overlooked by users.
When considering string trimmers, buy a model that not only feels right in your hand but also does the best job, considering your property's needs and your budget. For the most power against the toughest growth, the Stihl HomeScaper Series FS 45, $140, and FS 45 C Easy2Start, $170 (ratings available to subscribers), remain among our top picks.—Ed Perratore | e-mail | Twitter | Forums | Facebook
Essential information: Check out our free buyer's guide to string trimmers and make easier work of fall cleanup and end-of-season equipment maintenance.
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Q&A: Which type of pricing plan should I choose for the natural gas I use at my home?
I'd like to try to save money on my natural-gas bill this winter. Can I lock in a price for the season?
You can, but only if locking in a price is an option where you live. If you're in a state where utility companies handle both the supply and the delivery of natural gas, you can't lock in a price since utilities may offer only variable-rate plans, in which you pay the current market price.
But if you live in a state in which the supply and the delivery have been unbundled, you can shop around for the lowest price from natural-gas suppliers, aka marketers.
To determine whether this "customer choice" is available where you live, check the Natural Gas Residential Choice Programs map from the Energy Information Administration or go to the Web site of the public-service or public-utility commission in your state, which might include a list of reputable marketers.
Marketers offer a range of pricing options, including fixed-rate plans, in which you lock in the price for the life of your contract; variable-rate plans; and capped-variable-rate plans, in which the price floats with the market but not above a set limit. Marketers might also offer deal sweeteners to get you to sign on with them, such as 10 percent off your highest gas-use month or a $75 debit card.
"Fixed-rate plans are for the risk averse," says Steven J. Maslak, president and CEO of Gateway Energy Services, a natural-gas marketer with 300,000 customers in eight states. Yes, you'll lose out if the price drops, but, says Maslak, "you'll be singing hallelujah if a hurricane hits the Gulf of Mexico" and prices start to climb. A colder-than-expected winter or geopolitical unrest somewhere in the world could also drive prices up suddenly. (The chart, from GES, shows the recent price drop for natural gas.)
The EIA's recent projection that average U.S. consumers who heat with natural gas will pay 12 percent less this year than they did last winter might tempt you to lock in the price with a fixed-rate plan. But, remember, the EIA's projections, which are relative to the previous year, can change. For example, in September 2008 the EIA projected a 20 percent increase in winter-heating bills. By December 2008, the EIA had projected a 2 percent decrease. So opt for a variable-rate plan if you don't mind rolling the dice and dealing with prices that fluctuate monthly.
That element of uncertainty might make the capped-variable-rate option a good middle ground. You benefit from falling prices without taking too big a hit if the cost of natural gas goes up.
Whichever way you go, consider a budget-payment option, which levels payments over 12 months and eliminates wintertime spikes. You can also save yourself some money by reading the fine print before signing a contract. For example, marketers usually charge an early-termination fee on a fixed-rate plan, so make sure you understand the terms and verify that the termination fee isn't exorbitant ($200 is average).
Also, check that the price you agree to is "to the burner tip." That means it includes any pipeline, storage, and other ancillary charges that an unscrupulous marketer might try to tack on to the price of the actual fuel.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook
Essential information: The best way to save on winter heating costs is to make your home as efficient as possible. Start by installing a programmable thermostat and following our advice for buttoning up your home. For more information on energy pricing, read "How to Buy Green Electricity." Stay on top of the latest news surrounding the cash for clunkers for appliances program.