With heating oil, fuel pellets, and shelled corn all in the same $/MMBTU units, they can be graphed on the same chart. The y-axis scale for $/MMBTU are the same for most charts so the charts can be compared.

The general trend in these graphs is that since October 2007 the weekly prices have been increasing. One exception is seen here with the prices for fuel pellets. This energy value series has been nearly flat.

Fuel pellets are a seasonal fuel. The fuel pellet prices however did not drop off at the end of the 2007-2008 heating season. With the end of the season and all the fuel pellet capacity being constructed, the price of fuel pellets should have dropped. It didn’t really do that.

News stories have been reporting that pellet stoves are flying off the shelves in July. The stoves are back-ordered. Fuel pellet users are stocking up on pellets now for the winter. The price of heating oil is nearly double what it was last fall. Folks who have to pay that price to fill their fuel tanks may fair better by buying a new heating system. My prices for heating oil are wholesale, not retail. My fuel pellet prices are retail. I collect my prices every week and convert them to a million BTU (MMBTU) value.

In this graph of residential heating values, the fuel pellet values on a $/MMBTU basis are nearly flat for the last nine months. Last October, heating oil at $2.20/gallon, had an energy value of nearly $15/MMBTU. That is about the energy value of fuel pellets at the same time ($222.50/ton). By August with heating oil at $3.41/gallon, the energy value is nearly $25/MMBTU.

There is no estimation of energy conversion losses. Since all the values in this chart are being discussed as heating fuel, this chart would be more accurate if it included the conversion efficiencies that Dennis Buffington uses (Pennsylvania State University http://energy.cas.psu.edu/). In fact, the ability to compare substitute fuels is why Dennis Buffington includes the efficiencies. (My work moves across fuel platforms, so it gives me more flexibility to focus on just the inputs).

Many of the newer fuel pellet stoves will also burn shelled corn. Last fall, shelled corn at $3.25 per bushel had an energy value of about $7/MMBTU. That is about half the energy value of fuel pellets and heating oil during the same time period (last October). Over the last 9 months, the price of corn more than doubled hitting a weekly average price in Chicago on June 27 of $7.24 per bushel. This is an energy value of $15.86/MMBTU. Since February, the price of corn has had an energy value nearly equivalent to fuel pellets.

In July the price of corn began dropping. The price of fuel pellets has not. This is a great example of how $5/bushel corn is still a great energy value. At that price it may be difficult to feed to hogs or to make ethanol out of, but it is still a great value for heating a home.