A View from Here

Bill's Sisson's weekly Trade Only blog

The fuel factor: How will prices affect boating?

The price of gasoline has been falling of late — hooray for that — but the price of a gallon of regular is still significantly above where it was a year ago. That’s one of the factors that has hurt consumer spending and slowed economic growth. And it’s done nothing to encourage people to spend more time on the water.

Whether fuel prices return to where they were last summer remains to be seen, but recent history suggests they won’t. As of May 31, AAA reported that the current average cost for a gallon of regular was $3.78; a month ago it was $3.94. A year ago it was $2.73 a gallon. Will it fall another buck? It sure would be nice, but don’t hold your breath.

This is what some are predicting: The time between each subsequent episode of spiking energy costs will grow shorter, and as each cycle winds down, prices won’t fall back to their previous lows.

Looking down the road, oil markets will remain unsettled due to a host of global economic and geopolitical issues. If supply demand from China, the emerging markets and, eventually, the global recovery don’t push prices up, then political turmoil in the Middle East or North Africa or elsewhere might prove the catalyst. Or it might well be some event or series of events not yet on our radar.

As an industry, we need to find ways to address the impact of this broader, macro trend. How will fuel prices impact our consumers, both new and existing boaters? How will it affect our boats? Will we see a return to business as usual when conditions improve? Or has the Great Recession and its stubbornly persistent handmaidens — depressed housing prices and unemployment — tempered for the long haul consumers’ appetite for progressively larger, faster and costlier boats that get half a nautical mile per gallon?

As little as a month ago, a successful new-boat dealer who sells several product lines starting at about $50,000 and running to more than $1 million told me consumers were still favoring by a good margin his smaller, less expensive boats powered by modestly sized single diesels. These boats essentially sip fuel. “Buyers are still being very thrifty,” he told me.

A recent story in The New York Times, “Detroit’s Rebound Is Built on Smaller Cars,” suggests that by focusing on smaller autos rather than gas guzzlers, Ford and GM have more strongly positioned themselves for success.

The piece says that industry experts and car company officials believe the move away from trucks, SUVs and larger cars that began when fuel prices soared in 2008 will probably be permanent. Worthy of note: In addition to being smaller and more fuel efficient, this new breed of car from Detroit is also “rich” in big-car features and appointments.

What role will fuel prices and efficiency play in our development of new boats going forward? Will we see more fuel-efficient boats in the not-too-distant future? What might they look like, and how will they be powered? How much cruising speed will be necessary to appeal to a broad market? How much top end? Time will tell, but change on that front is in the wind.

We face the challenge of developing new product in this tough period where demand for new boats is still low. On the plus side, much progress has already been made in terms of propulsion efficiency across a broad front, from 4-stroke and direct-injection 2-stroke outboards to lightweight common-rail diesels and pod drives. Now we just need to put more of the right combinations together.

Weight steals performance from planing hulls, so builders need to reduce the carbs and trim the fat. Some of that can be achieved through improvements in construction and some through being more judicious about the amount of “stuff” we stuff into our boats.

In other words, it’s time we put our boats on a diet.

Comments

One comment on “The fuel factor: How will prices affect boating?

  1. Jerry Roehm

    While the high price of fuel has most people staying at home or even worst selling that gas gussler it seems that people who use Electric Outboard Motors are enjoying the water as much if not more. As an owner of a E-boat with an Electric Outboard Motor I am able to do just as much just not as fast and it only cost me pennies to re-charge as compared to lots of dollars to fill the tank. My boat is also Solar powered so living here in south florida I usally never plug in I just let the sun re-charge for free. I think we will see a trend toward people leaning to electric outboards in the future not only due to high fuel prices but just to stay green.

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