UK wood fuel prices to reach historic highs in 2022. Households can expect several price rises leading up to the 2022/2023 heating season.
Announcing what we are about to announce is something no wood fuel supplier wants to do. To put it bluntly, gone are the days when wood fuels were extremely inexpensive. And the sooner this is announced, the sooner a portion of you will start questioning whether transitioning to wood fuels actually makes financial sense for you. As a result, we find ourselves in a situation where most suppliers are pretending that everything is normal. But this can’t go on forever. Being the UK’s leading wood fuel supplier, it looks like the buck stops with us.
In this article, we will tell you about the ways we’ve been largely able to maintain low product prices up until now. How Russia’s invasion of Ukraine brought turmoil into the market by greatly reducing the supply of wood material and further increasing the price of manufacturing and logistics. How many price hikes you can expect and when you can expect them. And what is the best thing you can do to shield your household from the upcoming price hikes.
The Place of Wood Fuel in the Heating Market
Before we discuss anything else, we need to explain what position wood fuel occupies in the heating market. Using the language of economics, wood fuel is an inferior good. Wood fuel is the least expensive way to heat your home, so it is what people tend to choose when other options become more expensive or when people face economic hardship.
Throughout the last century and a half, we saw several demand spikes in the use of wood fuels. Almost invariably, they occurred when hydrocarbons became prohibitively expensive or the UK economy was facing difficult times. Examples include World War II (when briquettes, in particular, became extremely popular) and the energy crisis of the 1970s.
And whenever hydrocarbon prices dropped, people generally moved back to them, choosing to pay more for the added convenience offered by this type of heating.
2021/2022 Wood Fuel Demand Spike
The UK energy crisis saw the prices of gas and electric heat reach record highs.
More new log burners were installed in 2021 than in any other year in recent history. And most wood fuel suppliers, Lekto included, found it a lot more difficult to keep enough product in stock rather than actually selling the product.
Due to the high price of petrol and electricity, the process of turning that raw material into Ready to Burn firewood and briquettes also became more expensive.
And yet we managed to keep the prices roughly where they were before the energy crisis. As recently as February of this year, a kilowatt-hour of wood heat from Lekto cost as little as 10p/kWh. Note that this calculation was made during the most expensive part of the heating season and without including any discounts.
Seeing Opportunity in Challenging Times
The way we managed to achieve this was by leveraging the increase in consumer demand in such a way that allowed us to take advantage of economies of scale on an entirely new level.
This was an incredibly risky move for us, but it paid off.
As a result of these actions, we could source, store, and deliver high-quality wood fuels far less expensively than before. And while we did have to cut our profit margins somewhat, the massive influx of new customers more than made up for it.
As a result, Lekto Wood Fuels is now a far larger and more capable company than ever before.
Putin’s War in Ukraine
As recently as early February, we believed that wood fuel prices could be maintained at their current levels. We foresaw a further spike in demand as more and more Britons rediscovered wood heat after Ofgem raised the energy price cap, but that was something we were more than capable of handling as a market leader.
What we didn't expect was that one dictator's ambitions would trigger the worst war in Europe since World War II.
Importance of Russian, Belarusian, and Ukrainian Wood Imports
With the UK being heavily deforested as it is (just 13% of our land area is covered by forests), it is impossible to fully meet the nation’s demand for wood fuel with domestic tree cutting. Which is why most firewood in the UK is imported.
And while the three warring countries may feel like they are far away, they made up a disproportionately large portion of the UK’s firewood imports. Wood fuels from these regions were inexpensive and could be ordered in bulk, which made them the perfect choice for suppliers operating in all market segments.
If you ever bought cheap firewood or briquettes at your local supermarket, chances are you could thank logs from either Russia, Belarus, or Ukraine for keeping you warm.
With all three of these major market players suddenly being gone from the market, the industry suddenly doesn’t have the supply to meet projected customer demand. And what can be had is available at much higher prices.
Unprecedented Drop in Supply
With demand for wood heat likely to increase even further this year due to high energy prices, suppliers will be struggling to find the supply needed to keep their customers happy. And whatever can be bought, will be bought at a high price and will have to be sold at a high price as well.
Now, it's not all doom and gloom.
With prices rising, the UK market will become more lucrative to wood fuel producers from other parts of Europe who will inevitably adjust and rush in to fill the vacuum left by Russia, Belarus, and Ukraine. And domestic tree cutting will also increase as much as it can.
But there is a limit to how much extra supply can be pumped into the UK market in such a short time. And with there being less wood fuel to go around, even domestically-sourced fuelwood will become more expensive than ever. There is no way around it. This is simply how economics work.
2022’s Wood Fuel Price Increases
While every business will handle things slightly differently, we expect that the UK public will experience several noticeable wood fuel price increase in 2022.
One of these price increase waves will definitely take place around May-June 2022. It will occur because the price of wood fuel products has increased at the manufacturing level.
This price increase will represent the first time in recent history when wood fuels will become more expensive in the summer than they were in the preceding winter.
This increase isn't likely to be the only one this year. As markets are generally averse to sharp price increases, it is also possible that wholesale prices will be increased in many gradual waves. This will prompt wood fuel suppliers to mirror these gradual increases as well.
At this point we cannot say anything else with certainty, but we will keep you updated on the situation as it develops in the future.
How to Save on Wood Fuels in 2022
The best time to plant a tree was twenty years ago; the second-best time to do so is today.
If you’re reading this before December 2023, you still have time to stock up on wood fuels at prices that are lower than what you will have to pay soon.
If you have ample storage space, consider filling up your entire wood store (you’ll thank us later for it).If space is limited, stock up on as much as you can fit in and consider finding ways to use your wood fuel heat more efficiently (see our list of top log burner accessories).