Popularity of wood pellets leads to shortages, high prices

Those high heating oil and natural gas prices have caused a run on another kind of energy source: wood pellets.

The pellets are made from compressed sawdust gathered from various sources, such as furniture makers and sawmills, and are used in specialized stoves for heating. They’ve become more popular this winter largely because of high prices for traditional heating sources.

But the high demand for the pellets has caused a run on supply this winter – and a spike in prices. Some stores in New England reported running out of the materials.

“We regret that due to the surge in popularity of our fuels that we have not been able to keep up with demand in recent months,” says a note on the Web site of New England Wood Pellet, a Jaffrey, N.H., company that makes wood pellets and supplies them to dealers. “We are moving aggressively to increase our manufacturing capacity.”

“I was getting 50 calls a day for pellets in September and October, before the season really started,” said Anthony Martini, a salesman at Ocean State Stove and Fuel in Warwick, R.I.

Jim Rockett, a salesman with Sunrise Home & Hearth in Bangor, said Monday that concerns last fall about skyrocketing oil prices prompted wood-pellet users to buy as many pellets as they could. Instead of purchasing a week’s supply, he said, many bought enough to last the entire winter.

Demand was so high that in September, a 44-ton delivery of wood pellets to the store would sell out in three days, according to Rockett. Toward the end of the year, demand eased so that it took the store three to four weeks to sell the same amount.

“A lot of people panicked and started hoarding pellets,” he said. “The supply is doing a better job of catching up.”

The shortage may be easing but prices remain higher than usual. Martini said 40-pound bags of pellets at his Rhode Island store sold last year for $2 to $2.10 each. This year, prices have risen to $5 to $6 a bag, he said.

In Maine, the increase has been less significant, according to Rockett. Two years ago a 40-pound bag sold for around $4 and now it costs between $4.50 and $5, he said.

Rockett said that despite the long history of the forest-products industry in Maine, there are no wood pellet manufacturers in the state. There are such companies trying to get off the ground in Ashland and in Westbrook, he said, but at the moment all wood pellets sold in Maine come from out of state.

Mark Scarano, executive director of Piscataquis County Economic Development Council, said Monday that an entrepreneur recently was interested in starting a wood-pellet manufacturing company in Greenville. Despite the high demand and higher prices for the product, however, the person eventually scrapped the idea.

“It’s got potential,” Scarano said. “One of the challenges for anybody [starting out in forest-product manufacturing] is the high capital start-up costs.”

The three-quarter-inch pellets, which resemble rabbit food, are more efficient than standard cut and split hardwood because they don’t contain the bark, which produces more ash. More ash means incomplete combustion, said Norwood “Woody” Keeney, New England Wood Pellet’s operations manager.

The sawdust is put in a machine that compresses it to 60,000 pounds per square inch. It is extruded and cut to length, Keeney said. No other materials are added to the sawdust, he said.

Trees are not cut down specifically for making wood pellets. It all comes from waste wood or from trees removed because of forest management, Keeney said.