Low-Grade Markets, Oil Subsidies

Karl Davies karl at daviesand.com
Sun Jan 30 13:50:23 EST 2000



Ron Wenrich wrote:

<snip>

> Current low grade markets are pallet stock and RR ties.  Most guys can't
> produce a decent tie, so that market doesn't look attractive.  Good quality
> guarantees a good market and leads to a better bridge timber market (using
> large low grade oaks).

The quality issue usually gets left out of discussions about low-grade markets.

> Firewood market has been real low for the past
> several years - changing due to colder weather and higher fuel prices.
> Biomass is pretty well extinct due to the push by natural gas, coal and oil.
> Propose a plant, and they will undercut the price.  Of course, the govt
> tampers with the numbers which tips the balance away from wood products.

I read somewhere that a considerable part of US foreign policy is oriented
towards keeping crude oil prices at $18 per barrel.  Go below that value, and
the oil monarchies don't have enough cash to buy off their "citizens."  Go above
that value, and conservation and alternative fuels become economic.  If you go
to http://www.wtrg.com/prices.htm, you'll see that the real price of crude oil
has been just above $18 per barrel for the past 25 years.

<snip>

> I don't think this will take the traditional high-grade logger into
> low-grade stands; unless the difference between stumpage and cut product
> will compete.   Firewood is $90/cord.  If it jumps to $150/cord, people
> convert to coal and we get a bunch of pickup truck+chain saw operators doing
> lousy work.

$140 per cord would be nice. <G>

> Chip market is so satuarated that land clearers are blowing chips on the
> ground instead of taking them to market.  There is also an abundance of mill
> residue to compete for biomass energy.  Of course, the shutting down of
> several pulp mills hasn't helped matters.

About 15 years ago, I figured that at somewhere around $20 per barrel for crude
oil, chip-fired boilers would be competitive with oil-fired ones.  I don't know
where that threshold would be today.

> Higher oil prices will also bring along the promised technology revolution
> of fuel cells, solar and wind energy.  Not a bad idea.

Right.  All of us with an interest in alternative energy sources should get
together to eliminate oil subsidies.

KD





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