Wood Pellets Heat Up

BOB OAKES: Though winter seems a distant reality in August, many Massachusetts residents are already dreading the higher heating bills ahead.

Right now, home heating oil costs about $4.30 a gallon — over $1.50 more a gallon than a year ago.

And, natural gas is up about 16 percent from last winter.

The cost has led an increasing number of people to switch to wood pellet stoves — stoves fueled by pellets of compacted sawdust — pellets that are roughly the size of Good and Plenty candy.

On average it takes about three tons of wood pellets to heat a New England home through the winter, for a cost of about a thousand dollars. It could run three times that much to heat a home using heating oil this winter.

No wonder then, that according to the national non-profit Pellet Fuels Institute, shipments of pellet stoves are up 54 percent in the first quarter this year compared with 2007.

CHARLIE NIEBLING: Any alternative to oil is seeing unprecedented demand right now.

OAKES: Which means the supply of the wood pellets themselves is being squeezed. Charlie Niebling is General Manager at New England Wood Pellet, a regional supplier.

NIEBLING: And that's certainly been the case with our company. Where we went from being able to keep up with demand in March and April to absolutely being wiped out in the months of May and June and we're slowly climbing back onto our feet and trying to get everybody caught up now.

OAKES: The housing market slowdown is also affecting the pellet supply. Fewer homes being built means lumber mills are slow — mills which supply the sawdust to make the pellets.

One of the dealers trying to find wood pellets is Acton Wood Pellets.

[Sound of truck backing up]

OAKES: As pulled in, we found Jeff Reynolds backing-up a flat-bed truck loaded with a supply of pellets, bagged in white plastic with one ton of the bags on each pallet on the truck.

JEFF REYNOLDS: The last month, month-and-a half has actually inundated us. We're busy 7 days a week. There's never a time that we're not busy planning deliveries or taking orders, contacting customers to see how we can help them out.

OAKES: Dave Snow is one such customer in Acton. He was in picking up a pellet order. It's his third season heating with wood pellets, and Snow says it's been good experience, especially since he's saved:

DAVE SNOW: A small fortune. My gas bills when they started going up hit about 350 to 400 bucks a month, keeping it 65 degrees. I'm burning pellets now and keeping the house at 70-75. And supplementing the gas, I'm paying 70 bucks a month for my gas now. My total heating bill is down easily 50 percent or more.

OAKES: With fossil fuel prices up, Snow is buying his supply of pellets earlier than ever this year.

According to suppliers, pre-season buying is as big a reason for the wood pellet shortage as are the new customers.

Snow says he doesn't want to have to worry about running out during the winter.

But judging from appearances, there's no danger of that yet at Acton Wood Pellets.

[Sound of forklift at Acton Wood Pellets]

OAKES: As the forklift operator shuttles loads of pellets back and forth to the delivery truck outside, we speak inside the company office, located in the back of gas station, with Company President Kelly Reynolds.

[Sound of office, near garage at the back of gas station]

OAKES IN FIELD INTERVIEW: Behind us through the wall we can see the fenced in area where you're keeping pallets of wood pellets. At this time of the year in August, do you normally have that many out there?

KELLY REYNOLDS: We started placing larger orders in May when the spike really hit. Most of what we have in our yard is going out on a daily basis to meet previous orders.

OAKES: So that's all sold?

REYNOLDS: Everything in our yard is sold.

OAKES: How has the market changed in the time you've been doing this?

REYNOLDS: We don't have years of track record, but this year has been an almost crisis situation, where customers are panicking. So it's pushed up the demand season, which normally you'd see a higher demand in September, maybe even October.

OAKES: Back on June 17th you wrote an alert to your customers that your supply was cut by 90percent through August. How have you been dealing with the cutback, the shortage?

REYNOLDS: We've had to be more flexible, we've had to expand where we get products from, try new products, just to ensure we have something to offer people who are just interested in having something to burn this winter.

OAKES: Is it two-pronged concern? Number one, the high price of heating oil and natural gas and two whether they're going to get pellets?

REYNOLDS: Yes, many are concerned that with rising price of oil they have a more economical way to heat for the winter, which pellets do provide. There is the concern that they may not have the pellets, which shouldn't be a concern. There are pellets available. The majority of the problem is which brands are available, which brands do you really need and when do you need them.

OAKES: Most wood pellet manufacturers we talked with are increasing production, and are confident they'll be able to get enough pellets to dealers, such as Acton Wood Pellets, to satisfy customer demand.

However, they say that may take until November, by which time pellet stove owners will likely be feeling the chill of the winter heating season.

To see photos and a video of operations at Acton Wood Pellets, click on the links below. Our story was produced by WBUR's Sarah Bush.