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If You're Burning Wood Pellets You're Losing Money

I recently updated the Fuel Cost Comparison Chart at and the results were surprising. As of 3/20/06 it was actually cheaper in Metro Boston to heat with natural gas than with wood pellets!

During these times of fuel price volatility, itís important to keep a close eye on the relationship between fuel prices. Any homeowner who uses a wood pellet stove to supplement their gas furnace could be losing money and not even know it.

If you can use a calculator, youíre only minutes away from figuring out which fuel is the cheapest to burn at any given time.

When you compare fuel heating costs make sure itís apples to apples. The standard quantity used for comparing residential fuel costs is 1,000,000 BTUs of fuel heat content.

Cost To Burn Wood Pellets

Since a wood pellet stove needs only 125 lbs (1/16 of a ton) of pellets to generate 1,000,000 BTUs, divide the cost per ton by 16. At 8 a ton for wood pellets it costs .38 to produce 1,000,000 BTUs.

Cost To Burn Natural Gas

The price per therm (look at your gas bill) of natural gas in Boston is .1813. When you multiply it by 10.30 (10.30 cubic feet) it costs .17 to produce 1,000,000 BTUs.

Itís easy to see that natural gas heat now costs about .21 less per 1,000,000 BTUs than wood pellets.

Here are the quick cost comparison formulas for wood pellets and natural gas:

Price per ton of wood pellets divided by 16 = Cost to produce 1,000,000 BTUs.

Price per therm of natural gas x 10.30 = Cost to produce 1,000,000 BTUs.

The quick cost formulas are useful only for comparing natural gas to wood pellets because their fuel efficiencies are similar. In order to calculate the effective, or true cost of any heating fuel for comparison purposes, you must factor in the fuelís efficiency.

All fuel efficiencies are expressed in percentages. For example: coal is 60% efficient, electricity is 100% efficient and fuel oil is 80% efficient. In order to make the fuel efficiency percentage useful when you compare one fuel to another, you must find the coefficient of these percentages by dividing the decimal equivalent (60% = .60) by 1. So if you divide .60 by 1 you get a coefficient of 1.67.

The fuel efficiency rating for natural gas and wood pellets is 85%. If you divide 1 by .85 you get a coefficient of 1.18. Now plug this into our quick cost formula to obtain the effective, or true cost, of the fuel you are burning.

Wood Pellets: 8 divided by 16 x 1.18 = .60

Natural Gas: .1813 x 10.30 x 1.18 = .36

By expanding the quick cost formula to include the efficiency coefficient, the spread between the two fuels has now widened to .24.

Assuming fuel prices donít go crazy, you could save as much as during the remainder of this heating season by switching from wood pellets back to natural gas.

As prices change, feel confident that you have armed yourself with a simple, yet powerful tool to help you quickly determine when one fuel is more cost effective to burn than the other.

Here are the formulas to help you determine the true cost to produce 1mil BTUs of heat content for six more fuels:

Electricity: Price per kilowatt hour x 293 x 1 =
Corn Pellets: Price per ton divided by 16 x 1.18 =
Fuel Oil: Price per gallon x 7.1 x 1.25 =
LP Gas: Price per gallon x 11 x 1.25 =
Wood: Price per cord x .0607 x 1.67 =
Kerosene: Price per gallon x 7.41 x 1.25 =

About the Author:
is your guide to wood and wood pellet stoves, corn stoves, solar heating systems, radiant heating, portable space heaters, geothermal heat pumps, and landscaping for shade and windbreaks.
This article may be distributed freely on your website as long as the entire article including working links remains unchanged. Copyright 2006 by Sam Streubel all rights reserved.

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