HAMPTON FALLS, N.H. (AP) – The high cost of heating fuel has turned many people to wood pellets, prompting “staggering demand” among pellet makers and brisk business for dealers.

Panic, now that home heating oil prices have spiked, has sent the pellet stove market into overdrive, said Jim Fallon, owner of Home & Hearth, in Hampton Falls.

“People are very scared and don’t know if they are going to be able to heat their homes this year,” he told Foster’s Sunday Citizen.

The average cost of a gallon of home heating oil was $2.67 as of Sept. 8, according to the New Hampshire Office of Energy and Planning in Concord. Fallon said he sells wood pellets for $210 per ton, up $11 from a year ago. Heating a home with oil costs up to several thousand dollars over six months, compared to about $850 with wood pellets.

Steve Walker, the owner and president of New England Wood in Jaffrey, the state’s sole wood pellet maker, said concerns about wood pellet shortages this winter are valid.

“There is just staggering demand, and we’re running the plant 24 hours a day, seven days a week,” Walker said. “We’re doing our very best, but I don’t think we will be able to make as much as people want this year.”

Walker said he expected steady growth when he built his plant in 1998. But he said he never dreamed the price of home heating oil would skyrocket as it has.

“We have the highest growth expectations we’ve ever had in 13 years for the next three years,” Walker said.

New Hampshire and the nation’s Northeast can offset oil dependence with wood pellets, said U.S. Rep. Charles Bass, R-N.H. He arranged for a five-year, $1 billion program to reimburse consumers 25 percent, up to $3,000, of the installation cost for alternative energy systems. His rebate program was added to the latest energy bill.

He also called it important for the wood pellet industry to build more plants and for the logging and timber industry to grow and provide more of the low-grade wood needed to make wood pellets.

“Over the long term, it will be very good for New Hampshire,” Bass said.

James F. McManus, Jr., owner of Rochester Stove Co. in Rochester, said his wood pellet stove sales have been strong. He sold 12 stoves last weekend and 250 since January, double the number he sold last year.

Conservationists agreed. If more plants are built and the state’s logging industry adds jobs, there will be plenty of low-grade wood for wood pellets, said Charles Niebling, vice president of policy and land management at the Society for the Protection of New Hampshire Forests in Concord.

New Hampshire has 4.8 million acres of forest. The state conservatively can grow about 2.5 million cords of wood annually, Niebling said. As the demand and price for low-grade wood increases with the demand for wood pellets, Niebling said, more landowners will harvest more timber to feed the plants.

Fallon said he sold slightly more than 900 wood pellet stoves last year, but estimated that he could sell 1,500 this year. Customers have preordered hundreds of wood pellet stoves, and each customer will need an average of about three to four tons of wood pellets to get through the winter and early spring months, he said.

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Information from: Foster’s Daily Democrat, http://www.fosters.com

AP-ES-09-11-05 1522EDT