Big pellets, big price

Those of you who don’t heat with wood and have no intention of heating with wood can go out to the kitchen and have a sandwich or something. This is for the woodstove crowd, and the consumer protection crowd, if any have stopped in.

With the price of heating oil, propane, and natural gas bouncing around, many homeowners are turning to firewood for space heating. Some are installing pellet stoves instead of the old-style chunk wood stoves. There is another development in the field, a kind of halfway measure called compressed wood firelogs.

The pellets that go in pellet stoves are made of sawdust compressed and extruded into what looks like animal feed. Think of it as beaver kibble. Some manufacturers have upsized the process to produce ersatz logs from compressed hardwood waste. They go by names such as EcoLogs, SmartLogs, Envi-Logs, PowerLogs, and Bio-Bricks. Most are about 10” long and 3” in diameter. So far, so good. Yet another waste stream recycled in a useful manner.

I decided to try out a few boxes of the EcoLogs recently and came to a couple of conclusions. First Conclusion: This particular product fell apart as it burned, exposing huge amounts of surface area and burning too hot and fast for a woodstove. Second Conclusion: There is something wrong about the advertised comparison between compressed wood logs and real firewood.

The advertising pamphlet handed out by the farm supply store where I got the EcoLogs claimed that 40 boxes of logs equaled a cord of firewood. A similar product, the slightly larger Smartlogs, claimed that 30 boxes equaled a cord. I did a little investigating.

A forum on the ever useful website Hearth.com had a comment by the U.S. distributor of Smartlogs, as follows:

“We would like to Thank everyone who is interested in SmartLog and alternative energy products in general. We are the U.S. representatives for SmartLog and can only speak to the facts of our product. Our logs have been extensively third party tested in Canada and our logs deliver 7,800 BTU’s/lb vs. 5266 BTU’s/lb of tested sugar maple with 20-30% moisture. Our logs are Octagon shaped and do not roll. SmartLog is 3"X3"X10" and weights 3.3 pounds per log with a 6-8% moisture content. SmartLog lights easily and produces far less creosote and harmful emissions than ordinary fire wood and is EPA certified. We offer 6 and 12 piece boxes. 30 Boxes (360 Logs) is equivalent to 1 US Cord based on BTU’s generated.”

As they say on NPR’s financial show Marketplace, “Let’s do the numbers…”

(Unit note: A BTU is a British Thermal Unit, the amount of heat necessary to raise one pound of water one degree Fahrenheit. For a better visual, it roughly equals the heat released by burning one wooden kitchen match.)

For sugar maple, the standard numbers are 3,757 pounds per cord and 24,000,000 BTU per cord, or a theoretical heat production of 6,388 BTU per pound. According to Smartlog, sugar maple gives a real world 5,266 BTU per pound, for a total of 19,784,362 BTU per cord. Almost 20 million BTU per cord – I can believe that.

Smartlogs weigh 3.3 pounds per log. Multiplied by 360 logs this equals 1,188 pounds. Using SmartLog’s own numbers, 1,188 pounds x 7,800 BTU per pound equals 9,266,400 BTU.

9 million BTU versus 19 million BTU. Somebody dropped a 1 somehow.

Unless, possibly, the weight of a cord of sugar maple is a lot less than advertised: 9,266,400 BTU divided by 5266 BTU per pound for maple equals 1,760 pounds per cord instead of 3,757? It must have been that helium impregnated maple.

The numbers for EcoLogs come out much the same: 30 pounds per box times 40 boxes equals 1,200 pounds, multiplied by 7,800 BTU per pound equals 9,360,000 BTU. Again, 10 million BTU somehow wandered away.

The cost for 1,200 pounds of EcoLogs or Smartlogs is around $250, so in real terms this wood alternative is running about $525 a cord. This is over twice the going rate for cut, split, and delivered hardwood in my area. I called a local lumberyard that was offering PowerLogs by the one ton pallet for $585. The woman on the phone claimed that 2,000 pounds of PowerLogs were equal to “two and one-third cords” of normal firewood. Again, off by a more than a factor of two.

I don’t really blame the local suppliers for this. They get the promotional material from the manufacturers and rely on it, just like any other product. In fact, the compressed log manufacturers may be perfectly accurate about the heat output of their own product. They are being misleading about the comparison, in both weight and cost, between their products and ordinary firewood.

This is a departure from my usual political essays, but with so many people having a tough time paying their heating bills as it is, I hate to see them buy what passes for firewood at a price per BTU that rivals oil. I hope that the consumer protection advocates in state government crack down on this and force the manufacturers to put some real numbers on their products.

Track the horse race

For those of you political junkies who want to follow the polls and the electoral college count, here's the best site I have found: Electoral-Vote. The Votemaster provides a color coded map, convenient tables, and some interesting short political news blurbs.

The other, more broad polling site I like is Pollingreport. It has assembled stats on everything from the presidential race to opinions on health care and tax policy.

Eight days left.

Notes From the Oil Production Downslope: Smoke Signals

The price of oil on the NYMEX commodity exchange closed yesterday at $66.75 a barrel, less than half of its high point in early July at $146.65. Are happy days here again? Was all that peak oil catastrophe mongering so much short-sighted panic? No and no, sadly.

People pay a lot of attention to the price of oil for a couple of reasons. First, of course, it affects our lives. Gasoline and heating oil at $4 a gallon takes a whack out of our wallets. Second, and more to the point, we are taught that we can tell how plentiful or scarce a thing is by the price. Dirt cheap versus precious metals. The problem with this way of thinking about oil is a phenomenon I call “too many hands on the steering wheel.”

Over the long term, price does mean something. The fact that the NYMEX oil price broke the $100 mark this year when in 1998 it dipped as low as $11 is significant. It indicates that the supply of oil and the demand pressure for oil have become close. The recent price swings, however, are more about a complex system under pressure.

I should distinguish between above ground factors and below ground factors. Below ground factors are straightforward, yet mysterious. There is some amount of oil in the ground. This oil is distributed in reserves that are easier or more difficult to get to, easier or more difficult to pump out, and of varying quality. Overall, the quantity is declining by about 86 million barrels a day, the quality is declining, it is getting more difficult to pump out, and the more accessible reserves are playing out. This is all happening in a consistent and stately fashion, punctuated by periodic discoveries of a new oil field or a new section of an old oil field. Yearly world consumption has been exceeding yearly new discoveries since about 1982, and the two lines on the graph haven’t been anywhere near each other for years. Not much dramatic here. The mystery resides in the fact that the major oil producing countries are secretive about their reserves and also less than truthful about their production capabilities. All of the major OPEC producers magically experienced sudden doublings in their stated reserves at some point in the last twenty years. Jeremy Gilbert, former chief petroleum geologist at British Petroleum, politely called these “technically unsubstantiated reserve increases.” We call ‘em “lies.”

Above ground, we get into the “too many hands on the steering wheel” problem. Country by country, consumption rates are mostly going up, but when the U.S. consumption of gasoline drops by 4% (as it has), that is a big deal. The amount of oil and oil products in storage varies around the world week by week. Iran talks tough and the price goes up. Iran says something conciliatory and the price goes down. Trillions of dollars slosh back and forth between commodities (such as oil), the stock market, U.S. Treasury bills, money market funds, and back to commodities. Oil prices surge, oil traders worry about the effect of those prices on the economy, and there is downward price pressure. The MEND rebels in Nigeria blow up a pipeline and take over an oil platform, shutting in 300,000 barrels a day of production, and prices are pushed up. A new pipeline opens up somewhere else, China’s economic growth slows, and the price is pushed down.

Meanwhile, OPEC oil ministers are talking about trying to maintain oil prices between $70 and $90 by cutting production. This gives them lots of profit without major demand destruction or pushing anybody into structural changes in their energy use. They are confronted with all the problems listed above, plus the fact that some OPEC members cheat and exceed their production quotas.

Add to this the hysteresis of emotion among commodity traders. They are looking at all these factors and betting large sums of money on the possible price swings. They tend to jump onto trends and then try to gauge when the trend will stop. This adds a rubber band effect to the steering system: Spin the wheel hard one way, delay, tighten, and overshoot. Spin the wheel the other way, delay, slack, tighten, and overshoot.

In the present situation, where world oil production has been on a bumpy plateau since 2005, while demand has increased by a small percentage each year, small pressures have large effects. Our upcoming recession and, more importantly, fear and speculation about recession will fuel some dramatic volatility in oil prices. My advice is to ignore the week by week hysteria and look at the decade by decade movements in production and price. That message is clear: Flat and then dropping world supply, volatile and rising price. Pursue localization, conservation, efficiency, and renewable energy as if the recent drop hadn’t happened.

The Canadians, The Birds

I’d like to take a short break from political heaviness and offer a couple of happy things.

Thing One:

I was just up in Halifax, Nova Scotia on business. At one point I was in a car with two colleagues, trying to find our hotel. We had to go through a tollbooth at a bridge and the guy at the wheel asked the tollbooth attendant about the street and hotel in question. I expected to hear a terse, five-word response. Instead, after making change for us, the attendant leaned on the edge of his window and delivered a 45-second detailed set of directions, complete with block-by-block landmarks. Gratifying enough, but as a line of cars piled up behind us….

Nobody honked.

There was not even the slightest “bip” of reminder. The Nova Scotians waited politely while one of their own put the visitors on the right course. Our driver had lived near Halifax for a year and when I remarked on the incident he noted that one could get sick of that much politeness. After some time there he wanted to tell someone off, just because. I think I could stand it for a while.

Thing Two:

Have you ever been three feet from a full-grown bald eagle? How about a snowy owl? Ever seen a red-tailed hawk up close?

You can at the Vermont Institute of Natural Sciences in Quechee, Vermont. VINS is an educational center dedicated to raptors – those predatory birds with hooked beaks and sharp claws that make life difficult for small furry animals. They also have a rehabilitation center that handles about 400 injured birds a year. Most of their avian menagerie is made up of former patients.

The VINS campus is laid out across open fields just off Route 4, about 4 miles west of Exit 1 on I-89. The birds themselves are housed in a semicircle of mesh-roofed structures that allow them to fly around and perch. There are trails through the nearby woods and educational exhibits.

Three times a day the staff brings out a selection of birds for an educational presentation, closer inspection, and some open air flying. When I was there last month they brought out a red-tailed hawk, a kestrel, a Cooper’s hawk, and a barred owl. The setting is beautiful, the birds are magnificent, and I actually learned a few things. They are open 7 days a week till October 31st. Go.

Wooden Arrows

In the heyday of ancient Rome, cooks would prepare outrageous dishes for the extravagant feasts of the wealthy. One example of this excess was stuffing a duck inside a goose, and then that goose inside a sheep, and then the sheep inside a calf, and so on. The tradition lives on in the waning days of the American Empire. Our elected representatives just served us a turkey stuffed inside a pig.

That the $700 billion bailout bill failed in the House the first time out came as a shock to the power brokers of Washington. The voices of the many drowned out the voices of the moneyed few, and for a moment the corporate grip on our government slipped. That grip retightened, though, and the bailout was rewritten in the Senate.

That rewrite was the most cynical I can remember. Oh, I’ve seen straight-ahead bad bills. There were Constitution shredders such as the Patriot Act and the Military Commissions Act. There were oath-breaking abrogations of legislative responsibility such as the bill authorizing the Bush administration to invade Iraq. There have been the usual anti-environmental bills with upside down bizarro-world names like the Clean Skies Initiative and the Healthy Forests Act.

This one was pure unabashed bribery. The most notorious earmark, for its sheer particularity, was the $2 million reduction in excise taxes on “wooden arrows intended for use by children,” benefiting a factory in Oregon. There was a $192 million tax break for makers of rum in Puerto Rico and the U.S. Virgin Islands. Racetrack owners can now depreciate their facilities over 7 years, saving them $100 million in taxes. The long suffering Hollywood film industry got an extension of a tax break for filming in the U.S. (as if they wouldn’t) worth $478 million over 10 years. And so on.

Even I got some pork, by accident. They put the extension of the 30% tax credits for solar energy installations in the bailout bill as a hostage. The part they didn’t put in was the $2,000 cap on that tax credit. Buy $100,000 worth of solar, get a $30,000 tax credit. My business should boom, but I am not overjoyed. All of this generosity will be financed on credit, paid back by ordinary American taxpayers.

The effectiveness of this earmark bribery is being debated, as compared to the drop in the markets, for example, but it was bribery nonetheless. I would have more respect for the Senate if they had done it this way:

Senate Leader: I know this bill is a giveaway to the Wall Street tycoons and stinks to high heaven, but it comes with a bribe. Here is a suitcase filled with twenties. It is yours in exchange for your vote.

Senator Weasel: Thank you for the bribe. You have bought my vote. I have no self-respect now, but this money will allow me to buy pills so I can sleep at night.

Mark you, I wouldn’t have much respect for them, but the grudging respect due a thief who doesn’t rationalize his crimes.

Here’s a thought: Apply a little library science to legislation. Bills have to go through one or more relevant committees and/or subcommittees before being considered by the House or Senate as a whole. What if there was a law that bills could only have amendments relevant to the categories of committees they pass through? A banking bill can only have banking amendments related to the purpose of the bill, not tax amendments or agricultural amendments Of course, earmarks are the way that legislators bribe their way into the favor of politically significant groups in their home districts, so this would meet with resistance. The solution would be to, in effect, legalize and regulate earmarks. Set aside some percentage of the federal budget specifically for those geographically and economically specific giveaways. Senators and Representatives can fight over this fixed amount out in the open.

But that is just detail. Ultimately, we need to change the way we choose our representatives, cutting the big money out of our campaign system and replacing it with carefully monitored public financing. Until then, the pork will adorn the turkey, Wall Street will feast, and we will pay the bill.