The Impact Of Oil On Cruising

 

If there’s a more confusing three-letter word than “oil” we don’t know what it is.

Oil production goes up, the barrel price goes down. The barrel price goes down, unemployment goes up. At the same time, the price at the pumps goes down. All this instability sends investors scurrying, so the stock market goes down.

What happens to cruise prices?

Probably nothing. Cruise lines make more money because the cost of powering their ships drops. Royal Caribbean and Norwegian both hit year highs on the stock market this week. Should such gains be passed on to the cruise customer? 

Let’s put it this way: In the volatile world of oil prices, cruise lines inserted a line in the contracts with passengers that they could add a surcharge to cover oil.

How many did?

In the past five years, not once did we get hit with an oil surcharge. At least, not on cruises. Getting to them is another story, because airlines — at least some — didn’t just put the surcharge option on the table. They charged it, and when the price of oil dropped, the surcharges didn’t disappear. What they did do was bury it the cost of flying, saying it includes “surcharges” that were “to partially offset certain volatile…operating costs.”

Fuel.

While most of us are incapable of making sense of oil prices, it seems the cruise industry is prepared to roll with the punches. At the same time, the fuel surcharge rider is there…in case fuel costs become ridiculous, as they did in June 2008, peaking at $134 a barrel (yesterday it was $55). In other words, the surcharge possibility gives cruise lines an out, one they appear determined not to use.

Today at portsandbows.com: Getting the jump on Wave Season

Holland America Westerdam
7 nights
January 17, 2015
Fort Lauderdale (return): Grand TurkSan JuanSt. MaartenHalf Moon Cay
Inside: $499
Cost per day: $71
www.hollandamerica.com

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