ENERGY AND THE US HARDWOOD INDUSTRY – PART I: PROFILE AND IMPACT OF PRICES

Omar Espinoza, Brian H Bond, Urs Buehlmann

Abstract


According to the Energy Information Administration two fifths of the energy used by US wood products manufacturers comes from electricity and natural gas, the costs of which have pointedly increased over the last decade. Empirical indications exist that higher energy prices affect the industry’s profitability. Together with other developments such as, for example, unfavorable trends in hardwood stumpage prices, higher transportation costs, increasing government regulations, a challenging economic situation, or the ongoing globalization of markets, the US hardwood industry has to cope with some serious challenges threatening its profit potential. To understand the impact of energy prices on wood products manufacturers’ profitability and to gain insights regarding actions the industry is taking to respond to energy-related challenges, a survey was conducted among Eastern US primary hardwood products manufacturers in late 2010. Results show that, overall, the share of energy expenses on total production costs of respondents was 7.9%. A majority of respondents (61.8%) agreed that their energy expenses have increased by an average of 18.7% during the last five years. Half of the respondents reported a 5% or higher negative impact of higher energy prices on their profits over the same period. Actions undertaken by the industry to alleviate the negative impact of rising energy prices are presented in a second paper in this two-part series.

Keywords


Energy; Hardwood products; Energy efficiency; Energy consumption

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Welcome to BioResources! This online, peer-reviewed journal is devoted to the science and engineering of biomaterials and chemicals from lignocellulosic sources for new end uses and new capabilities. The editors of BioResources would be very happy to assist you during the process of submitting or reviewing articles. Please note that logging in is required in order to submit or review articles. Martin A. Hubbe, (919) 513-3022, hubbe@ncsu.edu; Lucian A. Lucia, (919) 515-7707, lucian.lucia@gmail.com URLs: bioresourcesjournal.com; http://ncsu.edu/bioresources ISSN: 1930-2126