Within the United States the price per ton of wood pellets has remained fairly steady and look at having no major decline any time soon. The reason for this is that in the United States ever since the major fossil fuel cost increase starting in 2005 more and more people have begun shifting to wood pellet stoves as an alternative to standard fossil fuel heating however domestic wood pellet production has not been able to compensate for the rising demand due to the fact that the wood pellet sector is still small enough in the US to not be seen as a viable investment for many production investors.
As of now most wood pellets are sold through chain stores per ton, with the cost per ton typically ranging from $200 to $250 depending on the location, with fifty 40 pound bags of pellets being purchased by consumers at one time. While bags can also generally be purchased individually for slightly higher rates most stores prefer to sell by the ton in order to shift stock quickly and allow for those in need to stock up on supplies quickly.
In 2008-2009 the wood pellet market also saw a downturn in demand in the US while other countries – particularly those in Europe – saw steady increases. In the US this has been primarily driven by reduced oil costs while Europe is seeking better, more cost effective alternatives for most homes. This does not mean that there is no interest in the US for wood pellets, however, and a slow growth does remain in some areas as many companies continue to strive for increased production and market development.
In the near future unless the market turns around costs are not likely to decrease and may in fact increase some due to a shortage of supply. Some suppliers such as Home Depot, for example, typically offer wood pellets are a much more affordable rate than other stores and as such may see a regular monthly shipment sell out in a day or two. This time of market imbalance only serves to strengthen wood pellet costs as the other other alternative for many home owners looking to run wood pellet stoves on a regular basis would be to import pellets directly from European producers. While this may seem more cost effective on the purchase itself due to Europe’s cheaper wood pellet rate per ton (generally up to 20% less than US offerings) transportation costs significantly limit this potential for individual purchases, and import regulations may further cause complication and costs to make this choice not a viable option.
It is highly probably that in the next decade wood pellet prices may see a decrease if the production capability is developed enough within the US and more wood pellet mills are established, however in the near future this does not seem to be a likely outcome as the market is still facing enough competition from a number of sources. Further, as alternative energy production such as solar and wind energy grows and comes down in costs more and more home owners may turn to this form of energy instead. In short, keep an eye on the market and watch carefully for fluctuations in wood pellet prices in the coming years.
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