Will oil price fall make cruising cheaper?

[Pet]

I have recently read that world oil prices have fallen by around 20% in the past 6 months and may continue to do so. Does that suggest that the price of a cruise (and flights) will be reduced in the coming months as the fall impacts positively on the fuel bills of the companies? I recall that a few years ago many, including Celebrity I believe, applied a fuel supplement to the prices of cruises to cover their increase costs when oil prices rose sharply. I wonder if it will work the other way round, perhaps by giving passengers a percentage reduction or a little on board credit?:confused:

[chengkp75]

I have recently read that world oil prices have fallen by around 20% in the past 6 months and may continue to do so. Does that suggest that the price of a cruise (and flights) will be reduced in the coming months as the fall impacts positively on the fuel bills of the companies? I recall that a few years ago many, including Celebrity I believe, applied a fuel supplement to the prices of cruises to cover their increase costs when oil prices rose sharply. I wonder if it will work the other way round, perhaps by giving passengers a percentage reduction or a little on board credit?:confused:

 

Most likely not. The fuel surcharge was used before the cruise lines used a form of futures trading to lock in fuel prices for a given period. While the price of crude has been above the benchmark for implementing the surcharge for many years, they don't use it anymore, as their fuel costs have become more stable and predictable. Further, with the newer emissions regulations entering into effect, more costly fuel will be required to run the ships. The North Sea and Baltic regions require ships to burn higher cost diesel fuel over the traditional heavy fuel, and the EU requires it (or it is coming into effect next year) while in port. The Med countries are considering an ECA as well, that would require lower sulfur fuel. And coming 1 Jan, the US ECA changes from 1% sulfur fuel (still being met by heavy fuel) to 0.1% sulfur, which means diesel fuel within 200 miles of the North American coast. While many cruise ships are installing exhaust scrubbers to meet the emissions standards and still burn the less expensive high sulfur heavy fuel, these cost about $1-1.5 million per engine (5-6 per ship), and they will take time to implement, and the cost will surely be passed to the consumer.

 

The only thing that would drive cruise fares down is demand. If they can't fill the ships, the price will be lowered, but from a business standpoint, why should they lower their prices just because costs go down? What store does that?

 

It would be nice, but it's not going to happen in this world.

[Cuizer2]

I have recently read that world oil prices have fallen by around 20% in the past 6 months and may continue to do so. Does that suggest that the price of a cruise (and flights) will be reduced in the coming months as the fall impacts positively on the fuel bills of the companies? I recall that a few years ago many, including Celebrity I believe, applied a fuel supplement to the prices of cruises to cover their increase costs when oil prices rose sharply. I wonder if it will work the other way round, perhaps by giving passengers a percentage reduction or a little on board credit?:confused:

 

I doubt it. I suspect that the best we can hope for is the prices will not go up as fast. Right now I'll bet that the cruise lines believe that their product is under priced.

[tunaman2011]

Greetings

 

I agree with the others, prices are driven by passenger loads. If they get butts in the bunks at the current prices why lower them? The best we can hope for is that they take some of the fuel savings and increase the food budgets so the chefs have more options to provide high quality offerings. But as noted, the switch from bunker to diesel may eat all this savings and then some.

 

Good Sailing

Tom

[ChucktownSteve]

I have recently read that world oil prices have fallen by around 20% in the past 6 months and may continue to do so. Does that suggest that the price of a cruise (and flights) will be reduced in the coming months as the fall impacts positively on the fuel bills of the companies? /quote]

 

Yeah when pigs fly will they lower the cost. I suspect the increase in the cost of groceries or other costs has offset any reduction in fuel costs.

 

Didn't you notice how high the prices went up when they give away the free perks like the Bev Pkg or gratuities?

[cherylroslyn]

I have recently read that world oil prices have fallen by around 20% in the past 6 months and may continue to do so. Does that suggest that the price of a cruise (and flights) will be reduced in the coming months as the fall impacts positively on the fuel bills of the companies? I recall that a few years ago many, including Celebrity I believe, applied a fuel supplement to the prices of cruises to cover their increase costs when oil prices rose sharply. I wonder if it will work the other way round, perhaps by giving passengers a percentage reduction or a little on board credit?:confused:

Even though they have been entitled to apply a fuel surcharge when crude is above a certain point, Celebrity as well as all of the major lines have declined to do so. For the past five years. There was a brief period when a few of the cruiselines applied the surcharge around 2008 and it was a public relations disaster....after that they stopped, so no real need to lower as they have not been getting the higher price.

[miched]

Many years ago the price of vending coffee and coffee served in coffee shops went up because of the increase in the price of sugar, even of you ordered it black. The price of sugar went down but the price hike remained. Reason was that they found that people would pay the increase and were use to paying it so why drop it.

 

Happy crusing 🌊🚢🇺🇸🌅

[TeaBag]

Many years ago the price of vending coffee and coffee served in coffee shops went up because of the increase in the price of sugar, even of you ordered it black. The price of sugar went down but the price hike remained. Reason was that they found that people would pay the increase and were use to paying it so why drop it.

 

Happy crusing 🌊🚢🇺🇸🌅

Exactly. Why give away money?

[bouhunter]

I wonder if it will work the other way round, perhaps by giving passengers a percentage reduction or a little on board credit?:confused:

 

You're joking, right???:D

[MarkusToe]

Rofl - have you ever seen decreasing fuel surcharge at airlines?

[hulamoon]

I noticed the lower cost of fuel was the reason given to purchase the stock.

[Orator]

I noticed the lower cost of fuel was the reason given to purchase the stock.

 

Stock prices in General have been declining this week. May analysis claim that the Ebola concern has hit the travel industry. Heard a host on CNBC ask if anyone would take a cruise with the Ebola situation. I believe that that combined with the general market decline has has a much greater effect on stock price than declining oil prices.

My answer to the OP's question is that they will not reduce prices, but will take cost savings right to the bottom line.

[RickT]

Haven't you studied "Petroleum Product Economics"?

 

It's fairly simple:

 

when the cost of crude goes up, the price of gas, diesel and home heating oil goes up in an exponential manner.

 

When the cost of crude goes down, nothing happens :rolleyes:

 

As others have said, supply and demand of cabins appears to be the bigger issue. Combine that with the cruiselines ability to charge a fuel surcharge (which surprisingly they haven't) when crude prices exceed a set value I wouldn't sit around looking for my cruise price to drop.

Edited October 9, 2014 by RickT

[ChucktownSteve]

Heard a host on CNBC ask if anyone would take a cruise with the Ebola situation.

 

What an idiot host. He's lost all credibility IMHO. Tomorrow he asks if anyone would take a train with the Ebola situation. Stay tuned. I wish you'd mention their name.

[Orator]

What an idiot host. He's lost all credibility IMHO. Tomorrow he asks if anyone would take a train with the Ebola situation. Stay tuned. I wish you'd mention their name.

 

It was the British chap. Don't recall his name.

[ChucktownSteve]

It was the British chap. Don't recall his name.

 

When you mentioned it, I immediately thought of Simon Hobbs, the Aussie. I've heard more garbage out of his mouth than any other host. Now as soon as I see him on he screen, I click out.

 

I can't think of a British host on CNBC.

[Orator]

When you mentioned it, I immediately thought of Simon Hobbs, the Aussie. I've heard more garbage out of his mouth than any other host. Now as soon as I see him on he screen, I click out.

 

I can't think of a British host on CNBC.

 

You are correct.Simon Hobbs it is!

[Andy]

When you mentioned it, I immediately thought of Simon Hobbs, the Aussie. I've heard more garbage out of his mouth than any other host. Now as soon as I see him on he screen, I click out.

 

I can't think of a British host on CNBC.

 

Hi Steve,

 

I didnt see the report, but if it was CNBC, it was probably Simon Hobbs, who previously worked for CNBC Europe before relocating to CNBC's Fort Lee NJ Headquarters. He's not one of my favorite financial commentators, and will leave it at that.

 

Getting back to the question at hand, I highly doubt that lower oil prices will result in lower cruise pricing. As Orator mentioned, the cruise lines will be the winners of lower oil prices, as it would add to their profits.

 

However, if the world economy hits a significant downturn, and if the market has a few more -300 point days ? then I suspect that lower oil prices, along with lower cruise prices might be a real possibility. Let's hope things will calm down very soon. If not, I will have to purchase a seatbelt for my chair at work... as it's been a very bumpy ride this week !

[The_Big_M]

Rofl - have you ever seen decreasing fuel surcharge at airlines?

 

Actually yes - but slower and lesser than rises.

[The_Big_M]

When you mentioned it, I immediately thought of Simon Hobbs, the Aussie. I've heard more garbage out of his mouth than any other host. Now as soon as I see him on he screen, I click out.

 

I can't think of a British host on CNBC.

 

I've never heard of him.

 

I did a search and according to wiki, and FT (which is British), he's English: http://ftalphaville.ft.com/2009/09/17/72501/cnbc-casts-an-englishman/

 

Looking at him, he also has British features.

 

Can't see any reason to think he's Australian.

[dirtymoney]

I've never heard of him.

 

I did a search and according to wiki, and FT (which is British), he's English: http://ftalphaville.ft.com/2009/09/17/72501/cnbc-casts-an-englishman/

 

Looking at him, he also has British features.

 

Can't see any reason to think he's Australian.

 

Simon is from the UK.

 

Mandy is 100% Australian:)

[Orator]

Prices could drop if people cancel out of fear and lots of cabins suddenly become available. Drop in oil prices will not influence the prices we pay for cruises.

Andy: In my experience panic usually leads to opportunity in cruising as well as many other areas.

Edited October 10, 2014 by Orator

[Pet]

Many thanks to Orator and others for their informative views. Over here in the UK the price we pay for petrol (gas) has dropped by as much as 20p per Litre (that's about £1 a gallon) since the early summer, but as others have said that doesn't mean organisations whose costs are governed by the price of oil have passed the savings on to the consumer, including the UK based cruise companies.

 

The main reason I asked the question was because I was thinking of booking a Celebrity cruise to Hawaii in a years time and wondered whether it would be worth waiting to see if cruise prices (or flights to the West Coast) reduced. But I think I will book it now!!

 

PS The only Brit host I recall is Piers Morgan and I think you wisely sacked him.

 

Cheers

[cle-guy]

One thing to remember is that a 20% drop in Crude oil prices does not translate to a full 20% reduction on the cost of the manufactured fuel.

 

The crude itself is but 1 line item of the expense related to the manufacture of fuel, likely one of the larger costs ( though I do not know), but the other parts of the manufacturing process may have experienced higher costs (or remained steady) that would eat up the savings of the crude itself.

 

Labor costs remain the same, fixed expenses of running the plants remains the same. Import taxes and fees and similar costs the same. Transportation costs, governmental regulatory costs....

 

I agree with all others, no price reduction will come from falling fuel prices.

[TLCOhio]

Prices could drop if people cancel out of fear and lots of cabins suddenly become available. Drop in oil prices will not influence the prices we pay for cruises.

Andy: In my experience panic usually leads to opportunity in cruising as well as many other areas.

 

Agree strongly with the consensus that any recent or expected reduction in oil prices will not yield any major cruise price changes. Many cruise lines had to "eat" past fuel spikes and there is the chance for Middle East trouble to send thing up, UP, UP again. It's a slow economic recovery that has many future questions and uncertainty.

 

Appreciate the smart comments above by Orator. Yes, lots is going on in the world. Things are not solved in the Middle East. Far from it. The whole round of questions on ebola and other types of ailments has not been determined. Lots of questions for when you want to get on an airplane with folks from unknown places carrying strange "things" in or on their bodies.

 

We are not hiding at home out of fear. We are getting ready for a Jan. 25-Feb. 20, 2015, Amazon River-Caribbean combo back-to-back sailing over 26 days. Had planned on Africa in early 2015, but too many questions there for right now.

 

THANKS! Enjoy! Terry in Ohio

 

Back from doing a 14-day Celebrity Solstice, Jan. 20-Feb. 3, 2014, Sydney to Auckland adventure on this ship and getting a big sampling for the wonders of "down under” before and after this cruise. Go to:

http://boards.cruisecritic.com/showthread.php?t=1974139

for much more information and lots of wonderful pictures on these amazing sights in this great part of the world. Now at 80,630 views for this fun posting.