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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

Prices on the Rise for Norwegian

The way we see it, which is not always through rose-colored glasses but is always through either bifocals or progressives, Norwegian is increasing fares by 10 per cent on the first of April for one of four reasons:

1. In this era of rocketing oil prices, it’s a way of covering NCL’s inevitable increased expenses without invoking the most despised and suspicious words in cruise-ship pricing — “fuel surcharge.”

2. The Wave Season promotion, which gives NCL customers up to four-category upgrades, is selling so well that Norwegian sees this as the perfect time to increase fares, since there is no perfect time.

3. The deadline creates an urgency to buy before the price goes up.

4. Well, it is April 1.

What do you think?

Energy Costs Impact Cruise Prices

It’s painful to pull up to the pump these days, even when you’re driving a cruise ship. The difference between people like us and the cruise lines is that we have no one to pay the fuel increase for us, and cruise companies do.

They call it a “fuel surcharge” and if you look at the fine print of your cruise documents you’ll discover — if you didn’t already know — that the surcharge is activated whenever the cruise company feels it should be. Fuel goes up, and you pay.

During the last round of dramatic increases in the cost of crude, some cruise companies activated the fuel surcharge for passengers who had already booked their cruises, and were forced to reimburse the passengers later. That led to the change in the wording of the contract that gives cruise lines the right to implement the surcharge whether you’ve booked or not.

Most of them stipulate it can be done once the price of crude oil reaches $65 or $70 a barrel. This week’s price climbed to more than $91 a barrel, and still there has been no action, at least on this side of the Atlantic. So what we have is a public relations situation…when can it be done without alienating you, the customer? Either that, or cruise lines bought their fuel as futures, paying up front for a guaranteed price that enables them to delay the inevitable.

Experts say that with the increased consumption in Asia and Latin American countries, the barrel price is headed for north of $100 in 2011, and perhaps as high as $150. It appears the only thing we can do to drive it back down is use less, which means more hybrid cars.

Unlike the last time this happened, the world’s automakers are ready, with families of electronic vehicles.

Meanwhile, has anybody heard of a hybrid cruise ship?

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