Latest Hot-Item Energy Commodity: Firewood
The surge in oil prices isn't just limiting how much people drive, it’s making them worry about next winter’s heating bill, and triggering a boom in the oldest source of fuel around: firewood.
"People are doubling their orders, trying to stock up on wood," said Vito Scarvaglione, owner of Vito's Tree Service in suburban Fort Lee, N.J. "It's going to be a crazy year — I’m trying to get as much wood done as possible."
Scarvaglione expects the price for a cord of wood (128 cubic feet) to approach $300 this winter, up from about $220 now.
That can still be a bargain when you consider the cost of home heating oil is up 84 percent in the last 12 months amid the global surge in commodity prices. Heating oil now costs a whopping $3.88 per gallon. That translates into about 38,000 British thermal units of heat per dollar, versus about 100,000 BTU per dollar for firewood.
And with banks such as Goldman Sachs and Morgan Stanley forecast even higher prices for crude oil later this year, wood providers like Scarvaglione are anticipating a record season. Scarvaglione is trying to build his inventory now before the cold weather approaches, especially because a decline in home construction has reduced the amount of wood available from clear-cutting developments.
“I guarantee there will be a shortage of firewood this year,” he said.
Wood-Burning Stove Demand Also Rises
The surge in firewood is also a boon to the wood-burning stove industry. “Orders are up 500 percent through the first 25 weeks of the year,” said Alan Trusler, vice president of home and hearth sales for stove and fireplace maker HNI Corp. Robert Dischner, director of marketing at rival Lennox Hearth Products, reported a 200 percent increase.
“In March, this was not forecast – no one foresaw this,” Dischner said. Shares in both HNI and Lennox’s parent company, Lennox International , have been beaten lower this year because less home construction has reduced demand for manufactured fireplaces.
Kurt Rumens, president of privately held rival Travis Industries, has also been scrambling to keep up.
“We have added 100 workers and we need another 100,” he said.
The renewed interest in wood heat is allowing the company to bring employment back to a former Boeing plant in Mukilteo, Wash., after its jobs were moved overseas in 2003.
Travis is getting mobbed with orders for stoves that burn normal wood, plus units that consume pellets made from scraps. He’s now telling some customers they’ll have to wait up to four months for new models, more than twice the time in early June. “Dealers are selling 30 to 40 pieces in a weekend, when normally it would be three to five,” said Rumens. “It’s not slowing down.”