Surging oil prices and fading dollar

[pms4104]

And while $9/day seems small, for our family of four on our upcoming 20-day B2B, that means our vacation just got $720 more expensive--a little more than pocket change.

Interesting ... if HAL indeed needs to reintroduce the fuel surcharge, I wonder how they'll handle a B2B ... as 1 cruise with the $126 max for each of 2 plus the $56 max for each of the other 2 ... or as 2 cruises with $90 each for 2 plus $40 each for the other 2 for each cruise segment. Depending how HAL handles it, it's either $364 or $520 for your party of 4.

[bigwally]

They did suspend the fuel surcharge but it used to stipulate that if the price of oil closed at $70 per barrel or higher on ANY of the preceding 25 trading days prior to your sailing, Carnival Corp. could assess the fuel surcharge.

 

Doesn't Carnival actually subscribe to "25 trading days up to 5 days prior"? I thought I read that somewhere. For us, that would mean we'd be in the clear on June 17th for our June 24th sailing.

[Terpnut]

Doesn't Carnival actually subscribe to "25 trading days up to 5 days prior"? I thought I read that somewhere. For us, that would mean we'd be in the clear on June 17th for our June 24th sailing.

You are right! The old policy read, in part: "For 2008 and 2009 departures, if the price of light sweet crude oil according to the NYMEX (New York Mercantile Exchange Index) is $70 per barrel or less at the 2:30 p.m. close of business as reported by Reuters on each of the 25 consecutive trading days ending five trading days prior to the guest's cruise departure date..." Of course, this was the old policy and Carnival can do anything it wants once the price of oil hits the magic $70/barrel as stated in the current policy!

 

FWIW, oil sold off yesterday, closing at $66.12/barrel! Yeah!

[ETinCA]

Today it finishing at $68.91 I think.....ugggh. Hard to say if they will reinstate their old policy or not. I would think the 25 day rule is out right now though.....I hope :)

[Terpnut]

Today it finishing at $68.91 I think.....ugggh. Hard to say if they will reinstate their old policy or not. I would think the 25 day rule is out right now though.....I hope :)

Yes, the price of oil really surged yesterday--to a 7 or 8-month high. :( Even if they reinstitute the fuel surcharge however, I would think they'd do so gradually and not affect people already well past final payment. That's my hope anyhow. :)

 

Well, the good news for today is that the dollar has rallied back to $1.40 to the Euro! :D

[pms4104]

Yes, the price of oil really surged yesterday--to a 7 or 8-month high. :( Even if they reinstitute the fuel surcharge however, I would think they'd do so gradually and not affect people already well past final payment. That's my hope anyhow. :)

 

Well, the good news for today is that the dollar has rallied back to $1.40 to the Euro! :D

Last time around, I believe the charge did impact those who already had made final payment. The effective date for the implementation and for the increases had been based on booking date rather than on payment date.

[Terpnut]

Last time around, I believe the charge did impact those who already had made final payment. The effective date for the implementation and for the increases had been based on booking date rather than on payment date.

True, however after the Florida state attorney general sued Carnival for basically "back assessing" customers unfairly (and I believe they ended refunding monies and settling), my guess and hope is that Carnival and RCI will both take a more tactful and gradual approach this time and grandfather many or most currently booked customers. Or at least those who have already made full or final payment.

 

And another thing to consider is that, this time around, the cruise lines have had plenty of time to plan for the increasing cost of fuel. It's not like the price of oil just recently and suddenly jumped--it has been rising slowly, methodically and predictably for over 6 months now. They should have been stockpiling, hedging or at least planning for this since the beginning of the year so it's really inplausable to tell your customers and stock analysts: "gee, now that the price of oil has reached precisely $70/barrel, there is a sudden and immediate negative impact on our margins that is so severe that we have to immediately begin assessing the fuel surcharge on all passengers today".

 

Remember that the fuel surcharge was originally "invented" or rationalizaed by the cruise lines to help them compensate for the sudden rise in the cost of fuel. There can be no such rationalization now. If their costs are indeed increasing, then they just need to increase their cruise fares to compensate. And if competitive pressures preclude that, well then their margins will just shrink or they'll lose money. It's the same thing that every other industry on the planet does when fuel costs rise--eat it or pass it on to the customer as part of your commodity or service price, if the market will bear it.

[pms4104]

True, however after the Florida state attorney general sued Carnival for basically "back assessing" customers unfairly (and I believe they ended refunding monies and settling), my guess and hope is that Carnival and RCI will both take a more tactful and gradual approach this time and grandfather many or most currently booked customers. Or at least those who have already made full or final payment.

Likely due to that litigation, once HAL suspended the charge they carefully included mention of possible reinstatement based on a $70/barrel benchmark ... included on all sales and promo pricing and booking pages. With that disclaimer, HAL protected themselves from such court actions in the future.

[Brian Raine]

Another bitch from a Brit. We are paying £1.00 a litre for petrol (current rate $1.60) about $7.30 a US gallon the govt takes approx 70% in tax, we produce oil but get screwed.The dollar is now $1.60 ish to the £1. last month it was $1.40 ish, in theory our prices should come down not go up.On our HAL cruise last month this made the shipboard costings expensive , to us. US passengers can still get better deals for cruises , even out of UK ports , than we can. So we can only hope the currency fluctuations keep giving us the edge.

[Terpnut]

Likely due to that litigation, once HAL suspended the charge they carefully included mention of possible reinstatement based on a $70/barrel benchmark ... included on all sales and promo pricing and booking pages. With that disclaimer, HAL protected themselves from such court actions in the future.

They protected themselves from legal liability but they still have to be careful in the court of public opinion. It's on that front that I would hope the lines would be more sensitive to their customers, be more transparent on their intentions and hopefully do something more gradual in any fuel surcharge implementation.

[Ontario Cruiser]

The Vacation Stimulus Plan which is on the back page of the Mariner Spring Issue quotes "Fuel Supplement Suspended" So does that mean Mariners will not be charged when they booked there upcoming cruises during this promotion?

Ontario Cruiser:confused:

[pms4104]

The Vacation Stimulus Plan which is on the back page of the Mariner Spring Issue quotes "Fuel Supplement Suspended" So does that mean Mariners will not be charged when they booked there upcoming cruises during this promotion?

Ontario Cruiser:confused:

No, I think HAL covered themselves with the footnote on page 35:

 

Terms and Conditions:

† Holland America Line reserves the right to re-instate the fuel supplement for all guests at up to $9 per person per day should the price of light sweet crude oil according to the NYMEX (New York Mercantile Exchange Index) increase above $70 per barrel. Please visit

http://www.hollandamerica.com for current fuel supplement information.

[nckvilledudes]

The price of fuel will really increase if the congress passes the cap and trade bill the the current administration is pushing. I'm afraid last year's high prices will seem small when the hugh tax is added to fuel prices.

 

mygate

I had not heard that much about this cap and trade in the news. I just read a detailed report about this and all I can say is you are right about the shock about higher prices in fuel. The other thing is the effect it will have in prices of all goods made. This will make people set and take notice. Makes one wonder what are they thinking about.

This will have a major impact on cruising.

 

Dan

[scopewest]

I guess I'll just start saving now in case that surcharge pops up for our Oct. cruise:(

[dawdlingcruiser]

Since our next cruise is casting off in 13 days, I am sticking my head in the sand and will stop reading this post!:D

[Terpnut]

Well, oil finally closed above $70/barrel today so now Carnival officially has the option to reinstate the fuel surcharge at any time at its discretion. Also, after a few good days, the dollar weakened badly today to almost $1.40 to the Euro. Not a great day for U.S.-based cruisers planning to cruise Europe and other international destinations... :(

[Terpnut]

Even with oil now over $72/barrel, it seems at least we don't have to worry about a fuel surcharge in the near future. Not sure about later this summer or fall, but for those of us sailing soon, there's no imminent bad news.

 

And meanwhile, the dollar has rallied big-time recently to less than $1.38 to the Euro--the strongest it's been in almost three weeks. Keep up the momentum Greenback. Woohoo! :p

[ginger and professor]

unfortunately the fed is purposely keeping the dollar low.This lowers the cost of our products and serves to increase our economy. We can expect the relative cost of oil to increase in terms of dollars.:(