STEAMBOAT SPRINGS, Colo. (AP) - About 2,000 tons of wood pellets are bagged and stacked in Confluence Energy's yard in Kremmling, but the only thing moving the material last week was the wind.

A shipping truck was nowhere to be seen.

"We have more capacity than we have utilization of the product," plant owner Mark Mathis said diplomatically. "We've got a little bit of inventory that we're still moving through."

The winter was a tough one for Mathis and, he said, for the pellet industry across the country. When he began production at the Kremmling plant in September 2008, less than two years ago, the market for biomass and alternative energy sources such as wood pellets seemed boundless.

Prospects were so good, Mathis said, that he and John Frink, of Rocky Mountain Pellet Co. in Walden, dismissed the idea of consolidating their efforts into one plant. Instead, they each opened for production and business.

Then, regional pellet markets became saturated, heating oil prices dipped -- causing consumers to look less for alternative fuel sources -- the economic recession struck and a mild winter dropped demand for pellets even further, creating what Mathis called "the worst year (the pellet industry) has ever had."

"I think a lot of people woefully misjudged the strength of the market," he said. "Of the 70 or 80 wood pellet plants (nationwide) that I'm aware of, there's only one that's running right now."

In January, MaineBusiness.com reported that Maine Energy Systems, a wood pellet startup, was unprofitable while facing the recession and relatively low oil prices. Partner Dutch Dresser recalled better times.

"A couple of years ago, we couldn't answer the phone fast enough," the website quoted Dresser as saying.

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