www.fueloilnews.com | FUEL OIL NEWS | FEBRUARY 2016 23
several years ago] is a great example of institutional use. There are a
number of institutions that are looking at biomass because of their
own policies related to climate change.
FON: Prices of oil and natural gas have decreased. How does
that affect the pellet industry?
Crouch: There's no question that's a challenge. Much of the
bagged fuel goes to pellet stoves—supplemental room heating—and
many of those pellet stoves are in households that have central units
that are fired by fuel oil. So as fuel oil goes down in price, much of
the angst on price comes off and it can impact use of pellets.
The other issue of course, and where bulk fuels share the same
problem, is that when it's warm in the mid Atlantic states and in the
Northeast and there just aren't a lot of degree days, it doesn't matter
what the price is. People aren't burning fuel. So that's a factor as well.
The other thing right now is that so much of the bagged fuel is
handled by retailers who are not energy oriented. Lowe's. Home
Depot. They're great retailers of bulk product. They know how to
do that in a heartbeat. They're very efficient with dry bulk product.
But it's just another dry bulk product for them, and when they're
done they turn off the spigot.
FON: Is there an opportunity for fuel oil dealers to diversify into
the wood pellets business?
Crouch: Throughout New England particularly there are a
number of fuel oil dealers who have made a business out of being a
one-stop shop: 'Whatever you want, I've got it.' And I see the [pel-
let] business transitioning over time to those kinds of people who
are energy specialists. Again, these transitions will be slow. Over ten
years we will see, I predict, businesses that specialize in energy. It's
a continuation of a tradition, which began with coal dealers who
converted to fuel oil. These are the guys who understand heat, and
understand how to keep people warm. That's why we think the fuel
oil dealers are so important, long-term.
l F O N
Approximately 2.8 million tons of pellets were consumed in the United States
in 2015, says the Pellet Fuels Institute, citing data it receives from RISI, a market
research firm. Nearly 100% of that volume was purchased in bags and used in
residential pellet appliances, PFI says. Further, the Northeast region of the U.S.
accounts for most of the consumption of pellets in North America, PFI reports.
