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Yukonomist: A firewood shortage in the middle of the forest

The Wall Street Journal is a fine newspaper, but its Markets section doesn’t have what you really need this time of year: good coverage of the firewood market.

The Wall Street Journal is a fine newspaper, but its Markets section doesn’t have what you really need this time of year: good coverage of the firewood market.

Pick your word. Yukon buyers are agog, gobsmacked, bouleversé, or worse at news that a prominent local firewood provider is charging $500 per cord.

Just a few years ago, you might have picked up a cord for $250 or less.

This is one of those landmark moments. Like how your grandfather still complains about the day gasoline hit a dollar a gallon.

If you are on a budget and live in an older home that burns a half-dozen cords a winter, pricey firewood is a major problem.

So, has firewood joined tech stocks, real estate and Bitcoin in the pantheon of financial bubbles?

No. People aren’t yet borrowing money to buy firewood in the hope of flipping it for $600 later.

But even if it is not a bubble, what is going on?

It comes down to good old supply and demand. There is not a lot of good data on either firewood supply or demand. People cut their own wood. There are lots of small operators and many cash transactions.

Back in firewood’s heyday, every house in Whitehorse used to burn wood for heat, and a sternwheeler might burn two cords an hour during its three- or four-day trip up from Dawson City.

These days, one market insider I spoke to estimated that Whitehorse burns around 10,000 cords of wood per year. If everyone paid $500 per cord, that would make firewood a $5 million-a-year business.

Despite the popularity of electrical heat in new construction, lots of people with older homes see firewood as a way to dodge high bills for oil, propane or electricity. Some also like how it avoids climate-change inducing fossil fuels. Demand has probably been growing in recent years along with our population.

However, an economist would not expect steadily growing demand to cause a price spike in a market like firewood. The Yukon has lots of trees and anyone, including customers, with a pickup and a chainsaw can get into the business.

There must be more going on.

The Yukon Statistics Bureau says gasoline is about 30 per cent more expensive than a year ago. Bigger operators with diesel equipment have seen that fuel rise 25 per cent. And there is a labour shortage, so wages and profits need to be a bit higher to keep people in the business compared to other employment opportunities.

But this still doesn’t seem like enough to explain $500-a-cord firewood.

Perhaps COVID-19 is responsible, like outbreaks shutting down lumber mills or semiconductor shortages closing down car factories?

No, instead it looks like we can blame it on an Administranium outbreak in the Yukon’s multi-level governmental apparatus. As reported in the News in August, “opening up new areas for timber harvest has been an uphill battle, with applications taking between 400 and 600 days to be approved.” The owner of Caribou Crossing Wood Supply said they would be importing logs from British Columbia.

Go to Google Earth and look at a satellite photo of the Yukon. You’ll see a lot of trees. If we’re importing logs, it makes me think I should quit my day job and start exporting ice to Greenland.

Similar to the way our government leaders managed to create a land shortage in a territory the size of France with a population of 40,000 people, we now have a wood shortage while living in the middle of the forest.

Myles Thorp, executive director of the Yukon Wood Products Association, said in early August that “When we started the process, it was inconceivable that we would be sitting here three years later … and still looking at no permits coming out of that thing for five years due to the administrative processes.”

So who is accountable? As is usual with Administranium outbreaks, everyone and no one. YESAB, territorial departments and First Nations governments are in the mix. The wood permits aren’t stuck with low-level bureaucrats. The issue is on the desks of territorial ministers and YESAB’s top-level executive committee.

An industry voice I spoke to described it as a joint territorial government and YESAB problem.

The territorial minister involved, John Streicker, told the News in August that “The industry had put in for some large blocks and they’ve been taking long through the YESAA system.”

Since Thorp’s comments, there has been some movement. On September 10, YESAB chair Laura Cabott sent a 203-page report on a large timber harvest plan near Haines Junction to the Yukon government for a decision. YESAB recommended approval, subject to 30 mitigation and six monitoring measures.

So far, however, the efforts of our multi-level governmental apparatus haven’t resulted in lower prices in the market. A local firewood player told me he still has access to wood and is charging less than $500 per cord, but that he is still deluged in desperate calls and turning away new customers.

So far, so unfortunate for families that rely on wood heat. Ditto for biomass suppliers, who are supposed to be one of our private-sector economic growth opportunities. But it’s good news for fossil-fuel providers, since people will rely more for heat on oil, propane and LNG-fuelled electricity.

Meanwhile, the Yukon government’s climate change plan mentions biomass 19 times as part of a plan to ramp up wood burning to reduce fossil-fuel emissions. It targets 20 large commercial and industrial biomass heating systems around the Yukon by 2030. If the average Yukoner can’t get enough reasonably priced firewood, what is going to happen when major buildings start sucking in firewood in industrial quantities?

The good news is that regular Yukoners can distance themselves from the Administranium outbreak by getting a personal firewood permit and cutting their own. Keep at least two metres from YESAB, and wear kevlar pants, ear and eye protection, and don’t forget to oil your chainsaw regularly.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.