I’ll be very surprised if I don’t see more boats on the water this season than at any time since the recession.
Reduced fuel prices will undoubtedly spark greater usage — and the more a boat gets used, the more likely the owners and their families will remain boaters. That’s part of the virtuous cycle that helps with retention, boat sales and introducing new people to the water.
“The low gas prices won’t last forever, but they’ve been hanging on for quite a while, and we’ve heard from boatbuilders, dealers and even consumers that it puts everyone in the boating mood,” says Randy Caruana, vice president of sales for Mercury Marine. “Boaters love to spend time on the water, and low fuel prices help make that happen.”
Lower fuel prices have real and psychological benefits. Who’s going to argue about having more discretionary dollars in their pocket? And even though the amount of money the average boater spends on fuel is a small percentage of the price of the boat and other costs, it has a disproportionately large impact.
“It’s a psychological thing,” says NMMA president Thom Dammrich. Current owners will use their boat more, he says. And for someone who is thinking about buying a boat, he continues, the savings from lower fuel prices may be just the factor that triggers the sale.
“And for people new to boating, it takes the gasoline thing off the table,” Dammrich says. “It just reduces a potential barrier for a new boater. And that improves our opportunities.”
Dammrich says experts expect crude oil prices to remain relatively low for an extended period of time, perhaps three or more years.
The federal Energy Information Administration estimated in January that the typical U.S. household will save $750 this year because of reduced gasoline prices and another $750 because of lower heating oil and propane costs.
In mid-January, the average retail price for a gallon of regular gasoline was $2.14, the lowest since May 2009, the EIA says. In 2014, regular gas averaged $3.36 a gallon. This year, the EIA estimates that the average will be $2.33 a gallon, rising to $2.72 in 2016.
Another potential positive would be a leveling or reduction in the price of petro-related boatbuilding materials, such as resin and other plastics. “We shouldn’t see any more increases in raw material prices,” says Dammrich, which could help keep the cost of new boats in check.
Other bright spots: The preliminary University of Michigan Consumer Sentiment Index for January rose to 98.2, an 11-year high that surpassed what many economists expected. Key factors in pushing the index above the December reading of 93.6 were the improving job market and lower fuel costs.
The Conference Board’s Consumer Confidence Index averaged 86.86 in 2014, up from 73.22 in 2013, says lending expert Jim Coburn. Keep in mind, a CCI of 100 or greater (not to be confused with the similar University of Michigan index) has traditionally been an important predictive indicator of growth in new-boat sales.
“The good news is the CCI has been inching upward toward that magical 100 mark — a benchmark that many believe is the sign of a healthy consumer economy,” says Coburn, managing partner of Coburn & Associates and a past president of the National Marine Lenders Association.
“Customers are telling me they’re going to spend more time on the water and go farther,” says Charles Tasso, director of marketing and sales for C&C Marine Inc. in Bristol, R.I., which builds NorthCoast Boats.
As a sign of improving times and confidence, C&C Marine is introducing a completely new twin-outboard NorthCoast 27 Hard Top express at the New England Boat Show in February, a big investment for a small builder.
When fuel prices skyrocketed a few years back, marine mechanic and marina manager Erik Klockars says boats sat in their slips and on their trailers. “People used their boats as cottages,” recalls Klockars, who serves as a technical adviser to Soundings Trade Only. “They didn’t go out as much. If fuel prices stay low, we’ll see people use their boats more. People will be a little happier.”
Powerboat consultant Eric Sorensen says he won’t be surprised if lower fuel prices encourage people to step up into larger boats. At the same time, Sorensen says, it behooves builders to continue their push for lighter, stronger, more efficient hulls, given the likelihood that at some point prices will go back up.
“Keep your eyes on the ball and have a strategy to address conditions when the prices go up or down,” Sorensen says. “Nothing lasts forever.”
For now, I am enjoying prices that I never thought I’d see again at the pump.
This article originally appeared in the February 2015 issue.