We will always remember the end of 2014 as the burst of the oil market bubble that started at the end of 1999. Since that time, the price of oil rose from roughly $30.00/bbl to peak at $135/bbl in 2008. For numerous reasons, but mostly because of the production of shale oil fracking in the United States, tar sand oil in Canada, and a large surplus of production in OPEC oil, the supply of oil seriously outpaced the demand causing the price of oil to plunge. As of January 16th the price of Brent oil was selling at $49.91/bbl, with predictions that oil could bottom out at $30/bbl or possibly even $20/bbl by the end of Q2 2015.
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So what does all of that mean? It means that now is the time for boating! Following basic rules of economics, supply is up, demand is down, and therefore the price of gasoline and oil has been in freefall. Nationally, the average price of gasoline in October was $3.41/gal. while currently the national average sits at $2.14/gal. The cost to fill a 40-gallon tank is $86, down more than $50 from just the end of last boating season in 2014!
The larger question to grapple, however, is whether these low prices are going to negatively impact the boating industry for 2015. Typically, lower costs on oil per barrel favors the consumer while hurting the overall economy. It’s the difference between micro- and macroeconomics. With oil prices continuing to drop, it is becoming increasingly unfavorable for US oil fracking companies to continue production, therefore layoffs are imminent—indeed in many parts of North Dakota and Texas they have already started—and that will have a major impact on the national and local economies.
However, the good news is that lower oil prices favor motor sports and vehicle recreational activities. This, of course, includes boating. With the consumer saving money at the pump it allows for more liquid income that can be invested elsewhere, and that “elsewhere” is looking to be back into outdoor recreational activities.
Since the economic recession of 2007, all outdoor recreational vehicles have suffered. The boating industry was hit hard, as was dirt toys industries and the snow performance industry. As hard times hit America, people tended to sell off their motorized toys and look to other activities.
Now, with the economy rebounding—unemployment fell to 5.6% in December with a growth of 5% GDP in the Q3 2014—people are once again ready to hit the trail and the water. With the economy holding steady, and the price of oil continuing to drop, the prediction for outdoor recreational activities in 2015 is at an all-time high.
Speaking with Phillip Faulkner, Marketing at NauticStar Boats, LLC, about the boating market trends of 2015, we were happy to hear that 2015 is shaping up to be a great year for the manufacturer, and indeed probably many other manufacturers, as well.
Using the Houston Boat Show, Jan. 2nd through the 11th, as a compass of the year, Phillip remarked, “The Houston Boat Show, which is supported by a big oil market, was a little concerned over the falling price of oil. We were not sure how it would affect us before the boat show, but afterward report record sales from the show, setting up the rest of the year. All other boat shows we’ve attended have been very good to us.”
Phillip predicted that 2015 would be, “a strong year for NauticStar and the industry as a whole.” This excellent news kicks off the boat show season, and should continue through to the boating season itself. At PDB, we are excited to see the start of a phenomenal year in boating and look forward to seeing everyone on the water.
