Indeed…

Two ideas 1. he was highly afraid and only thoughtof escaping. 2. He didnt want to burn down the forest.

Why couldn’t Frodo just melt down the Ring in his fireplace? How can Patchouli fight Reimu with curtains of fiery magic without worrying about her library catching fire? Because of magical enchantments. Likewise, Spike’s flame likely is not powerful enough to overcome said enchantments.
 
The alternative explanations work well, too. Remember he’s technically a baby dragon.

Bad writing.

Cause lighting timberwolves in a forest just screams forest fire

And then the Timberwolves raided Celestia’s palace…

Because this was a stupid episode.

Because the timber wolves aren’t made of dry wood, so they won’t burn properly.

@Lium  

It’s either;
 
A. Krek had a good explaination for this, because Spike was scared of huge basties made of wood.
 
B. Things don’t always go well when you put them on fire.
 
C. Logic is not this show’s strong point, even in its fantasy setting.

I’m going to go with Krek’s explanation. He just didn’t think of it because he was so afraid at the time. And if he had thought of it, then yeah, they probably wouldn’t have caught fire because the wood was too wet. Remember how the Timberwolves smelled bad too - rotting wood also smells bad.

Also, Spike is immune to fire. Even if it had no effect, it wouldn’t have made things worse.

What’s worse that Timber Wolves? Flaming Timber Wolves.

Because Merriwether is a bad writer.

Serious answer: he probably just panicked.
 
Joking answer: he is not Trogdor.

Because he is lvl 5 and they are lvl 35

he is a baby dragon, after all

Because then you would have… FIERY TIMBERWOLVES!

Timberwolves are alive (they hunt and have a case of bad breath) and since they are living creatures the wood they are made out of is probably alive as well.
 
Now if the wood is alive it’s also likely it’s moist as well since timberwolves probably drink water in one way or another.
 
This leads to the conslusion that the wood TWs are made of is wet… and wet wood does NOT burn too well so spike would have to keep a stream of fire on them for at least several seconds for them to catch fire.
 
And he would obviously get maimed and torn apart in the process.

Writing shortcuts.

Probably because teaching kids to solve your problems with arson wouldn’t go over well with parents.

Because Spike’s low level flame just won’t vaporize them fast enough. His flame will only… well Rothy’s pic says it all.

Where’s the challenge in that?

Wouldn’t that light up the entire forest in a chain reaction?

@ROTHY
 
This.