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High Demand for Firewood this Winter

Posted by Hartnett Products on

https://www.rte.ie/news/business/2022/0904/1320302-energy-crisis-fuel/ 

Energy crisis sees demand for firewood rise as heating oil prices change customer behaviour

Fears of rising prices and energy shortages this winter has led many consumers to stockpile fuel, according to distributors here.

Solid fuel companies are reporting a significant increase in orders in recent weeks, with many consumers on average buying more than they would have done a year ago.

That comes as concerns have been raised about the possibility of energy shortages during the winter, largely due to reductions in supply from Russia.

Ecofuel, which specialises in sustainable solid fuels, including peat briquette alternatives made from waste sawdust that is compressed into burnable logs.

It was established in 2014 and has grown steadily since then, with its business picking up significantly during the pandemic.

That growth began to level off again this year, as the country's economy moved back towards normality, but has spiked again in recent weeks.

"In the last two months, of July and August, we’ve seen an increase of 85%," said Janis Vitols, founder and chief sustainability officer with Ecofuel. "Our July was crazy – we saw an increase of 138% in July compared to last year."

Mr Vitols said the spike in demand has been made up of both returning and new customers, while the company has also seen a significant increase in the volume of goods purchased in each transaction.

"I’ve seen a 171% increase for the last two months in the average order values," he said. "So the guys are not only buying early, they’re also making larger purchases.

"People are generally worried about what it’s going to cost them in October or November, but most importantly they’re wondering if it’ll be available for consumers to buy."

Summer sales spike for solid fuel

Co Fermanagh-based Surefire Wood has also seen a pick-up in demand from its customers in recent weeks.

"Customers are ordering two or three bags rather than just the one," said Richard Armstrong. "Coal has tripled in price is the last six months or so, so there’s a higher demand for firewood anyway."

He said that July and August were traditionally quiet months for his business, but that began to change in recent years.

But the up-tick in demand has been particularly significant this year.

"I would say demand has trebled anyway," he said. "It was 25-30 degrees out and the orders will still coming in for winter."

Mr Armstrong said much of the activity is coming from existing customers who are this year buying more, however there are also many new customers who are also looking at the fire as a home-heating option again.

Despite this he said availability of solid fuels should remain good through the winter, even if some suppliers struggle at certain points.

"We’ve been in the business now 35 years," he said. "Different suppliers go quiet at different times in the year or in different years, they might not have enough supply for you, but there’s always been back-up suppliers there."

Heating oil customers ordering early and often

There is also little concern of shortages in the home heating oil market, though it has seen consumers react differently to the energy crisis.

Many consumers placed earlier and larger-than-normal orders in the immediate aftermath of Russia’s invasion of Ukraine, which has led to a fall in demand in recent months.

"In the last couple of months sales have been down quite significantly, by about 20-25%," said Kevin McPartlan, CEO of Fuels for Ireland, formerly the Irish Petroleum Industry Association, which represents fuel distributors and retailers across the country.

"We’re not seeing stockpiling now – what’s actually happening is the volumes people are ordering are actually lower than they typically were, but they’re buying more often."

Mr McPartlan said that is because customers are now ordering, for example €500 worth of kerosene rather than asking for their tank to be filled.

He said that significantly higher oil prices mean that the cost of filling a tank in one go is out of reach for many consumers.

Price volatility means that some will also be reluctant to pay for a full tank when there is a chance of the price coming down later in the year.

"Price of wholesale kerosene has been going up in 6-7c per day," he said. "What that means is if you take a delivery today, and I take a delivery tomorrow, the price you and I offer, even if we’re on two ends of the same town, could be radically different."

He said consumers are proving savvy in this regard and are actively seeking out the best price in the area.

That means that distributors who stocked up at a high point in the market are often left struggling to shift their supply.

But whatever way the price moves, supplies are expected to remain steady through the winter.

Delivery times are also short at the moment, even with the trend of smaller-but-more-regular orders, though Mr McPartlan said they could slow somewhat in the event of a cold snap.

Supply concerns grow

The price of gas spiked last week after Russian energy giant Gazprom said it would shut off supply from the Nordstream pipeline, claiming the need for maintenance.

The move has again raised fears that Russia will completely cut off gas supply to Europe during the winter. That would also have a disproportionate effect on electricity prices here, as nearly half of Ireland’s electricity generation is gas-powered.

Authorities across Europe have been considering ways of reducing demand for power in the months ahead.

In Ireland, the Commission for the Regulation of Utilities has suggested suppliers could be charged more for access to energy during the peak hours of 5-7pm.

It has also proposed a number of measures targeted at larger energy users, such as data centres.

However while solid fuel and heating oil suppliers may be benefitting from a spike in demand, they are also impacted by the general increase in energy prices.

Fuels For Ireland says the cost and availability of diesel is a particular pinch-point for its members, as that is a key factor in their ability to delivery fuel orders to customers.

Meanwhile Ecofuels has also been negatively impacted by rising utility prices, largely due to the energy that’s required to make its products.

The wood and sawdust used needs to have low moisture levels in order to burn effectively; that required heating which means the rise in gas and electricity prices has raised production costs.

However Mr Vitols says the increases in product prices have not been as dramatic as those faced by customers reliant on gas and oil.

"We supply most of the wood-fired pizzerias in the country… we have specialised briquettes from France," he said. "We’re only raising the price to our suppliers by 15% - that’s a great advantage."


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