The Real Price of Fuel

Dec 22nd 09
by Richard Boggs

As 2009 grinds to a close, the economy continues to hold the attention of everyone with a stake in the yacht business. The cost of keeping a large yacht in operation has driven a few owners ashore, and a left a few more tied to the dock. For many though, the scent of an economic rebound and renewed energy in the charter market is fueling confidence throughout the industry.

Speaking of fuel, compared to this time last year the cost of keeping the bunkers full hasn’t changed as much as the economy in general. A gallon of diesel loaded in St. Maarten costs about the same as last December, and bunkering in Gibraltar will cost a few percent less than a year ago. But for reasons unknown to most mortals, this year a gallon of fuel oil costs about 25 percent more in Fort Lauderdale.

The price of diesel fuel has been more volatile than the constituents of a barrel of crude oil and unlike its chemical makeup, far more difficult to predict.

Diesel fuel prices go up and down with the cost of crude oil, rumors of peace or war and the vagaries of the weather and proximity to national holidays. Predicting what it might cost to top the tanks for the next crossing might best be left to the economists. Not that they are all that accurate or can even agree. As George Bernard Shaw observed, “If all the economists were laid end to end, they’d never reach a conclusion.”

The average cost to bunker in the U.S. in 2009 was about 42 cents per gallon less this year than it was in 2007, and about $1.40 less than 2008. Don’t get too excited, this pleasant interlude will undoubtedly be short lived and is most likely an artifact of the recent worldwide financial implosion. A graph of fuel prices over the past 18 months looks like a map of the Himalayas with midsummer of 2008 showing a profile steeper than the north face of K2.

The cost to produce a gallon or liter of diesel fuel is remarkably similar internationally, except for Italy where it is consistently higher, and the U.S. where it is consistently lower. What is not consistent is the amount of taxes added to fuel bill. According to the U.S. Energy Information Administration (EIA), the base price for diesel fuel (in US dollars and gallons) last week was $2.46 in France $2.41 in the UK, $2.78 in Italy, and $2.28 in the USA. That was before the taxman showed up on the dock.

After taxes and duties have been paid, prices begin to get interesting. Top off the bunkers in France and expect to pay $5.77 and that moderately priced UK oil has jumped up to $6.75. That is high enough to choke an Italian owner who pays a comparatively modest $6.15 per gallone di gasolio. Despite the American propensity for complaining about taxes, they get off easy in comparison and only have to pay $2.75.

Of course for every tax there is a usually a way to avoid paying it. Commercially operated yachts generally upload fuel free of duty and taxes so the actual price paid is somewhere between the base price and the fully taxed version.

 

Related Topics:

The Sulfur Situation

Why Use a Bunker Broker?
The Fine Art of Superyacht Fuel Sampling



Tags: Essentials Fuel 



Rating  Average 2.5 out of 5

4 Comments
  • As a commercial yacht in the Med, I can only take on fuel with a valid/upcoming charter agreement, any other situation I have to pay full duty... My employer does operate as a business.
    Even when the fuel prices were over a hundred bucks a barrell fuel bills did not increase that much, where I noticed most that people were being hit was on food prices.. Bottom line, speculators of fuel prices on the stock exchange are the ones who should be torched here, if people can afford their luxuries so be it, but it is these greedy speculators, who need to be brought to task, for the struggling families in this world... If you can still afford your toy good on you... I still have a job
    Posted by maca 13/01/2010 10:23:06

  • Yes Blonde...you understand. Yachts...no matter what silly label you use to describe them, what silly flag you fly or what kind of yacht...are always leisure activity toys.
    At this minute, worldwide, authorities are devising strategies to tax and force YOU.,.. the little guy consumer of energy, to conform with modern standards of energy use. . It will be absurd to penalize YOU when you turn up the heat abit on a cold night to sooth your sore back and be penalized while Billionaires are pouring on the gas with their tax exempt toys.
    The whole concept of tax free status simply encourages over consumption. Gee !!!! if I go Caymans I can afford the 60 meter I deserve instead of this wimpy 50 meter.
    For thirty years Ive run national flags yachts from the highest tax juristictions in the world. No need to fear your job....dedicted yachtsman will pay whatever the cost to fly their flag with pride and enjoy the sea.
    Posted by junior_1 31/12/2009 12:11:54

  • Can't help but agree, why should yachts ever be tax free? It's not like they are transporting war orphans!

    And why do fuel companies bother labeling any of their costs as "marketing." Your diesel is as good as mine, all regulated. It doesn't taste or look better.

    And do WE, the yacht crew, really care about the nitty gritty of fuel? NO

    We only care if the owners of the yachts we work on suddenly decide that they can't or won't fill the tank anymore.
    Posted by ablonde 31/12/2009 08:17:59

  • Tax free for "Commercial " yachts...Oxymoron. Perhaps in the New Year a torch will be shown on this abusive scam and these ridiculous "Commercial" yachts will be brought to heel.
    Posted by junior_1 30/12/2009 11:49:54

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