ari
Well-known member
Guldy, you're a serious boater, how much would you say you've spent on diesel this year for your boat?
Ari.
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Ari.
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Which Boat
- Thread starter simonjames
- Start date
Gludy
Active member
Re: market forces, arbs form orderly queue here
"I dunno if it will be £1 or whatever, just using that number as an example. I do howver expect it will be in the order of £1/ litre. And that's the whole point. The market doesn't know what the fuel price will be. Nor does it know Virgin will launch the full offer for BA. Markets are priced on people's expectation of the future, not their knowledge of it."
Are you having a bad hair day or something?
I totally agree, all markets are priced on expectation and that is what my point has been all about boaters are not expecting anything like the £1 a litre. However your point is that the market gas discounted not just on a guess but on the £1 per litre price .... you have been rastating this throughout the debate and have transferred your assumption onto the market and then state that it has adjusted to it ... it aint!
Most expect a fairly modest increasd because they think that no governement would impose the full 300% to 400% price hike.
"I say there is considerable knowledge in the market now of the price rise proposal, and the market has discounted the expected outcome already."
You are making wild assumptions:-
1. That the price hike IS TO £1 per litre
2. That the market expectation is this and that it has discounted boat prices to this already.
"And boat prices have not moved much despite that. You say, in contrast, that the markets have not already discounted the fuel price hike and it's becuase of that ignorance that prices haven't adjusted. Let's agree to disagree on that"
Nope ....
I do not say that. I say that the price of boats has not been discounted to the £1 per litre basis and that if tommorrow the governement announced that scale of price hike I say boat prices would drop - you say they would stay the same ..... !!!!
Markets have not moved down is my point to show that they have not already discounted the fuel hike.
"Not sure I understand your penultimate para with VAT in it."
Simply that many people with common sense who realise the practial problems in changing red diesel take a view that the easy way for the government to raise the price is to simply alter the VAT rate. This would leave commercial boats as is whilst raising the price to the leisure boater.
"You clearly have a view on the furure market - you say demand and pricing for mobos will fall considerably etc (I think - sorry if misquoting you). You also think today's market has not yet discounted those things that YOU think will happen."
Your logic is flawed My view is simply that the market has been told to expect a price raise based on some sort of parity with Europe ... the basis of the proposal does not make sense in view of our disregard for parity on road fuels ... so there is confusion as to what will happen ..... that is it ... that is my view and it is based on fact. Others think the change will be limited to a modest rise. I do not know.
"So aren't you in the classic arb/hedge fund manager position? You should sell now, buy back later?"
As you so rightly say the market is based upon expectation and I am very aware it has not discounted the cruising power boat prices yet. I have alkready formulated my plans for what to do and it is based upon the clear facts there for all to see .. that the market has not discounted the boat prices yet!
If I were to sell/buy back I have to take into account that there is no way I would ever run any boat in the UK if I was paying road level prices .... I would base my boat overseas in the Med. The bigger boats, as I have already pointed out will be less effcted than the avarage boat. The average crusing Mobo owner wil be devastated and prices will drop - if overseas decend to buy up the boats they will be bought at lower prices and then we have the UK crusing power boat scene left empty excpet for a few rich owners and that is what I object to!
You are applying market forces in too simplistic a manner.
<hr width=100% size=1>Paul
"I dunno if it will be £1 or whatever, just using that number as an example. I do howver expect it will be in the order of £1/ litre. And that's the whole point. The market doesn't know what the fuel price will be. Nor does it know Virgin will launch the full offer for BA. Markets are priced on people's expectation of the future, not their knowledge of it."
Are you having a bad hair day or something?
I totally agree, all markets are priced on expectation and that is what my point has been all about boaters are not expecting anything like the £1 a litre. However your point is that the market gas discounted not just on a guess but on the £1 per litre price .... you have been rastating this throughout the debate and have transferred your assumption onto the market and then state that it has adjusted to it ... it aint!
Most expect a fairly modest increasd because they think that no governement would impose the full 300% to 400% price hike.
"I say there is considerable knowledge in the market now of the price rise proposal, and the market has discounted the expected outcome already."
You are making wild assumptions:-
1. That the price hike IS TO £1 per litre
2. That the market expectation is this and that it has discounted boat prices to this already.
"And boat prices have not moved much despite that. You say, in contrast, that the markets have not already discounted the fuel price hike and it's becuase of that ignorance that prices haven't adjusted. Let's agree to disagree on that"
Nope ....
I do not say that. I say that the price of boats has not been discounted to the £1 per litre basis and that if tommorrow the governement announced that scale of price hike I say boat prices would drop - you say they would stay the same ..... !!!!
Markets have not moved down is my point to show that they have not already discounted the fuel hike.
"Not sure I understand your penultimate para with VAT in it."
Simply that many people with common sense who realise the practial problems in changing red diesel take a view that the easy way for the government to raise the price is to simply alter the VAT rate. This would leave commercial boats as is whilst raising the price to the leisure boater.
"You clearly have a view on the furure market - you say demand and pricing for mobos will fall considerably etc (I think - sorry if misquoting you). You also think today's market has not yet discounted those things that YOU think will happen."
Your logic is flawed
My view is simply that the market has been told to expect a price raise based on some sort of parity with Europe ... the basis of the proposal does not make sense in view of our disregard for parity on road fuels ... so there is confusion as to what will happen ..... that is it ... that is my view and it is based on fact. Others think the change will be limited to a modest rise. I do not know."So aren't you in the classic arb/hedge fund manager position? You should sell now, buy back later?"
As you so rightly say the market is based upon expectation and I am very aware it has not discounted the cruising power boat prices yet. I have alkready formulated my plans for what to do and it is based upon the clear facts there for all to see .. that the market has not discounted the boat prices yet!
If I were to sell/buy back I have to take into account that there is no way I would ever run any boat in the UK if I was paying road level prices .... I would base my boat overseas in the Med. The bigger boats, as I have already pointed out will be less effcted than the avarage boat. The average crusing Mobo owner wil be devastated and prices will drop - if overseas decend to buy up the boats they will be bought at lower prices and then we have the UK crusing power boat scene left empty excpet for a few rich owners and that is what I object to!
You are applying market forces in too simplistic a manner.
<hr width=100% size=1>Paul
Gludy
Active member
"1. There are no European buyers in the UK market at the moment because there is no financial advantage for them to buy here. If the UK market dives then there will be plenty of buyers here just like there were in the early 90's. "
But the only reason they would be here is if the price dropped!!!!!
If I am right and it drops then they will come and the UK crui sing poerboat scene will be devastated.
If you are right everything will be as it is now as regards boat prices despite a £1 per litre cost. yet if you told the person who started this thread that his 45 foot Princess will cost him say £4 to £5 per mile for fuel, I bet he would think again before paying out £140k for one! Nor would that boat cost £140k if the price of fuel was so high.
2. Sorry but there is no major price difference between here and the Med and any broker that tells you that is feeding you a line. Some boats do come back from the Med to here for sale but there are specific reasons for that, usually, that a Brit boat sells better in the UK or its shagged out from charter use and nobody will buy it. In any case what are the "effects of Med cruising"? Med boats usually have lower hours and better equipment
Once boats gets past about 6 to 7 years old in the Med, they are lower in price than here in the UK. However this point does not make any difference either way to the issue here.
"3. Do you really think hull forms can not be developed for better fuel efficiency? I take it you're still tooling around in a Mk1 Cortina then "
There are already all the market force incentives there to save fuel so whilst there will be improvmements they will be slow - drag factors on cars have not changed since the modern shape emerged - nor can they reduce them much more.
"In a way, I have already experienced what you say is going to happen in the UK because 2 years ago, after about 12 yrs boating in the UK, we started boating in the Med. From paying 28 p/l for fuel in the UK, I was suddenly paying 70 p/l in France."
WRONG .. you have not expereinced it. To experience it the price would have to be £1 per litre and the boat based in the UK!
If all this happens I move to the Med because the balance moves in favour of the Med. If I have my boat out there I have a holiday home, even without crusing around ... I have sun etc. and fuel that is 50% cheaper! So the balance of what is being provided is tipped very much in favour of the Med.
Staying with the poor weather, fuel prices 50% higher and not the same sort of holiday location home means that I would take all my business away from the UK and so would most either sell out or get out. The point is what is left in the UK?
"Now, unfortunately, I am not sufficiently rich to not care about fuel costs. We have changed the way we use the boat, whereas in the UK, we would not particularly think about how many miles we cruised, we just blatted about everywhere, in the Med, we do think more carefully about how far we go and also at what speed - I cruise slower now in order to conserve fuel
I think that this is the way motor boat owning will go in the UK. Not less boats or lower prices, just less cruising"
But as explained above even if you do not go anywhere you have the sun and a holiday home ... given all you have out there would you not agree that to return to the UK with fuel 50% more expensive would never happen?????
Would you agree that the balance would be tipped even more strongly in favour of the Med?
<hr width=100% size=1>Paul
But the only reason they would be here is if the price dropped!!!!!
If I am right and it drops then they will come and the UK crui sing poerboat scene will be devastated.
If you are right everything will be as it is now as regards boat prices despite a £1 per litre cost. yet if you told the person who started this thread that his 45 foot Princess will cost him say £4 to £5 per mile for fuel, I bet he would think again before paying out £140k for one! Nor would that boat cost £140k if the price of fuel was so high.
2. Sorry but there is no major price difference between here and the Med and any broker that tells you that is feeding you a line. Some boats do come back from the Med to here for sale but there are specific reasons for that, usually, that a Brit boat sells better in the UK or its shagged out from charter use and nobody will buy it. In any case what are the "effects of Med cruising"? Med boats usually have lower hours and better equipment
Once boats gets past about 6 to 7 years old in the Med, they are lower in price than here in the UK. However this point does not make any difference either way to the issue here.
"3. Do you really think hull forms can not be developed for better fuel efficiency? I take it you're still tooling around in a Mk1 Cortina then "
There are already all the market force incentives there to save fuel so whilst there will be improvmements they will be slow - drag factors on cars have not changed since the modern shape emerged - nor can they reduce them much more.
"In a way, I have already experienced what you say is going to happen in the UK because 2 years ago, after about 12 yrs boating in the UK, we started boating in the Med. From paying 28 p/l for fuel in the UK, I was suddenly paying 70 p/l in France."
WRONG .. you have not expereinced it. To experience it the price would have to be £1 per litre and the boat based in the UK!
If all this happens I move to the Med because the balance moves in favour of the Med. If I have my boat out there I have a holiday home, even without crusing around ... I have sun etc. and fuel that is 50% cheaper! So the balance of what is being provided is tipped very much in favour of the Med.
Staying with the poor weather, fuel prices 50% higher and not the same sort of holiday location home means that I would take all my business away from the UK and so would most either sell out or get out. The point is what is left in the UK?
"Now, unfortunately, I am not sufficiently rich to not care about fuel costs. We have changed the way we use the boat, whereas in the UK, we would not particularly think about how many miles we cruised, we just blatted about everywhere, in the Med, we do think more carefully about how far we go and also at what speed - I cruise slower now in order to conserve fuel
I think that this is the way motor boat owning will go in the UK. Not less boats or lower prices, just less cruising"
But as explained above even if you do not go anywhere you have the sun and a holiday home ... given all you have out there would you not agree that to return to the UK with fuel 50% more expensive would never happen?????
Would you agree that the balance would be tipped even more strongly in favour of the Med?
<hr width=100% size=1>Paul
Gludy
Active member
This year because of weather and a family illness I only used about £2500 worth.
Next year I estimate I will use about £4k to £5ks worth.
I pay low prices for diesel and so if the price went o £1 per litre multiply the above figures four fold.
Extra cost say about £12k. this at 5% equates to a capital sum of £240k.
So if i knocked £240k off the price of the boat and the buyer invested the 240k with a 5% after tax yield he would pay the same as I pay now for my boating!!!!
The effect of this fuel increase, had it been factored into boat prices would be large!
Take a much smaller boat costing say £100k, 100 hours a year at say 15 gallons an hour = 1500 gallons.
At my prices now this equates to about £1875, estra cost would be £5625 so you would need to knock £112,500 off the price of a boat to compensate!!! Thats worth more than the boat!!!!
Even at a 300% (as opposed to 400%) increase the value of the boat becomes almost zero.
These price factors have not been factored into todays boat prices!!!!
<hr width=100% size=1>Paul
Next year I estimate I will use about £4k to £5ks worth.
I pay low prices for diesel and so if the price went o £1 per litre multiply the above figures four fold.
Extra cost say about £12k. this at 5% equates to a capital sum of £240k.
So if i knocked £240k off the price of the boat and the buyer invested the 240k with a 5% after tax yield he would pay the same as I pay now for my boating!!!!
The effect of this fuel increase, had it been factored into boat prices would be large!
Take a much smaller boat costing say £100k, 100 hours a year at say 15 gallons an hour = 1500 gallons.
At my prices now this equates to about £1875, estra cost would be £5625 so you would need to knock £112,500 off the price of a boat to compensate!!! Thats worth more than the boat!!!!
Even at a 300% (as opposed to 400%) increase the value of the boat becomes almost zero.
These price factors have not been factored into todays boat prices!!!!
<hr width=100% size=1>Paul
duncan
Active member
Re: market forces, arbs form orderly queue here
finally unequivocla agreement on something!
"To experience it the price would have to be £1 per litre and the boat based in the UK!
If all this happens I move to the Med because the balance moves in favour of the Med. If I have my boat out there I have a holiday home, even without crusing around ... I have sun etc. and fuel that is 50% cheaper! So the balance of what is being provided is tipped very much in favour of the Med.
Staying with the poor weather, fuel prices 50% higher and not the same sort of holiday location home means that I would take all my business away from the UK and so would most either sell out or get out. The point is what is left in the UK?"
Boating is a big part of my life but I spend significantly in the UK to achieve it - Mobile home, drive to and from said home and a (25ft diesel) boat on a pontoon. At 4k a year for the mobile home, 1k fuel to boat, and 2.5k fixed boat costs the change from 1000 gallons at 27p/l to 100p/l (200 hours at 5gph) is more than enough to swing the argument somewhat! And I at the low end of the impact with relatively high fixed costs. If I had a 40ft boat (big enough to act as that holiday home, it would be heading for Barcelona/Alicante or whatever the day the increases are fixed.
<hr width=100% size=1>madesco madidum ..../forums/images/icons/smile.gif
finally unequivocla agreement on something!
"To experience it the price would have to be £1 per litre and the boat based in the UK!
If all this happens I move to the Med because the balance moves in favour of the Med. If I have my boat out there I have a holiday home, even without crusing around ... I have sun etc. and fuel that is 50% cheaper! So the balance of what is being provided is tipped very much in favour of the Med.
Staying with the poor weather, fuel prices 50% higher and not the same sort of holiday location home means that I would take all my business away from the UK and so would most either sell out or get out. The point is what is left in the UK?"
Boating is a big part of my life but I spend significantly in the UK to achieve it - Mobile home, drive to and from said home and a (25ft diesel) boat on a pontoon. At 4k a year for the mobile home, 1k fuel to boat, and 2.5k fixed boat costs the change from 1000 gallons at 27p/l to 100p/l (200 hours at 5gph) is more than enough to swing the argument somewhat! And I at the low end of the impact with relatively high fixed costs. If I had a 40ft boat (big enough to act as that holiday home, it would be heading for Barcelona/Alicante or whatever the day the increases are fixed.
<hr width=100% size=1>madesco madidum ..../forums/images/icons/smile.gif
Observer
Active member
Re: market forces, arbs form orderly queue here
I'm getting a bit confused by what appears to be circular argument. You say the (second user boat) market has discounted price rise, Paul says not?
Thinking about my own position:
1. If diesel was £1 per litre a year ago when we upgraded from single shaft 200hp to twin sterndrive 300hp, we would not have. I just couldn't get comfortable with spending a four figure sum to fill up the tank.
2. Yes I did know about the potential loss of derogation but it was 'off the radar' - "sufficient unto the day..." and so on.
So I think I come down on Paul's side - the market has not discounted a massive hike in fuel costs. What will happen? Not sure. What are the possibilities:
1. Nothing. People carry on as before without any noticeable effect. Unlikely IMO because that takes load more money which has to come from somewhere.
2. People move boats to Med? Possibly some do that but not large numbers IMO. We wouldn't.
3. People stop using their boats and sell em. Possible and that would mean oversupply and falling prices.
4. People stop using their boats but don't sell em in hope market will recover. More likely imo. Boats are seen as slower depreciating (than cars) so not much to lose by hanging on for another year.
5. Perhaps loads of downsizing (e.g. people who are used to spending £x on fuel will dowmsize to smaller boat so still spending same amount but in much smaller boat). That looks quite possible to me but I think will also mean much less use. If you're used to certain amount of space you won't like fitting in smaller space so use the boat less often - more dayboating perhaps? Possible result of that is sharp fall at the top end of the market but middle and lower sectors less affected. More value in fuel efficient designs so perhaps good for displacement and semi-displacement boats which can run at non fuel guzzling speeds.
I dunno really. These are just ideas.
<hr width=100% size=1><A target="_blank" HREF=http://aflcharters.co.uk>Dream Dancer</A>
I'm getting a bit confused by what appears to be circular argument. You say the (second user boat) market has discounted price rise, Paul says not?
Thinking about my own position:
1. If diesel was £1 per litre a year ago when we upgraded from single shaft 200hp to twin sterndrive 300hp, we would not have. I just couldn't get comfortable with spending a four figure sum to fill up the tank.
2. Yes I did know about the potential loss of derogation but it was 'off the radar' - "sufficient unto the day..." and so on.
So I think I come down on Paul's side - the market has not discounted a massive hike in fuel costs. What will happen? Not sure. What are the possibilities:
1. Nothing. People carry on as before without any noticeable effect. Unlikely IMO because that takes load more money which has to come from somewhere.
2. People move boats to Med? Possibly some do that but not large numbers IMO. We wouldn't.
3. People stop using their boats and sell em. Possible and that would mean oversupply and falling prices.
4. People stop using their boats but don't sell em in hope market will recover. More likely imo. Boats are seen as slower depreciating (than cars) so not much to lose by hanging on for another year.
5. Perhaps loads of downsizing (e.g. people who are used to spending £x on fuel will dowmsize to smaller boat so still spending same amount but in much smaller boat). That looks quite possible to me but I think will also mean much less use. If you're used to certain amount of space you won't like fitting in smaller space so use the boat less often - more dayboating perhaps? Possible result of that is sharp fall at the top end of the market but middle and lower sectors less affected. More value in fuel efficient designs so perhaps good for displacement and semi-displacement boats which can run at non fuel guzzling speeds.
I dunno really. These are just ideas.
<hr width=100% size=1><A target="_blank" HREF=http://aflcharters.co.uk>Dream Dancer</A>
D
Deleted User YDKXO
Guest
1. But thats my point. If there was a temporary price discrepancy between Europe and the UK, then that would encourage foreign buyers to buy their boats here and prices would stabilise not crash
2. Why do 6-7yr old Med boats suddenly depreciate relative to UK ones? Dont understand this at all
3. The fact is that the market forces are not yet strong enough but I'd be surprised if some forward looking boat builders (eg Sealine) are not at least looking at different hull forms in order to improve speed and fuel efficiency
4. What the hell has the weather got to do with the price of anything?/forums/images/icons/smile.gif and I dont know where this £1/litre comes from. I pay about 88p/litre for road diesel for my car so 70p/litre for marine diesel is a perfectly valid comparison, its certainly a hell of a lot different to 28p/litre
No, I would'nt think that it tips it in favour of the Med because, even at 70p/litre, fuel is still a relatively small part of the cost of running my boat there. I certainly spend more on marina charges, maintenance and air fares than on fuel. The costs of running a boat in the Med are generally higher than the UK, certainly enough to outweigh the difference in fuel cost if red diesel goes
I will use about 6000litres of fuel this season so my fuel cost will be about £4200. If the UK price goes up to £1/litre, thats £6000 for fuel but the £1800 difference would not be enough to cover the additional cost of boating there. For a start, I probably spend about £5000 per season in air fares and car rental costs alone. So, I cant see a mass exodus to the Med happening
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2. Why do 6-7yr old Med boats suddenly depreciate relative to UK ones? Dont understand this at all
3. The fact is that the market forces are not yet strong enough but I'd be surprised if some forward looking boat builders (eg Sealine) are not at least looking at different hull forms in order to improve speed and fuel efficiency
4. What the hell has the weather got to do with the price of anything?/forums/images/icons/smile.gif and I dont know where this £1/litre comes from. I pay about 88p/litre for road diesel for my car so 70p/litre for marine diesel is a perfectly valid comparison, its certainly a hell of a lot different to 28p/litre
No, I would'nt think that it tips it in favour of the Med because, even at 70p/litre, fuel is still a relatively small part of the cost of running my boat there. I certainly spend more on marina charges, maintenance and air fares than on fuel. The costs of running a boat in the Med are generally higher than the UK, certainly enough to outweigh the difference in fuel cost if red diesel goes
I will use about 6000litres of fuel this season so my fuel cost will be about £4200. If the UK price goes up to £1/litre, thats £6000 for fuel but the £1800 difference would not be enough to cover the additional cost of boating there. For a start, I probably spend about £5000 per season in air fares and car rental costs alone. So, I cant see a mass exodus to the Med happening
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Gludy
Active member
"1. But thats my point. If there was a temporary price discrepancy between Europe and the UK, then that would encourage foreign buyers to buy their boats here and prices would stabilise not crash"
You are being too simplistic.
On the figures with a £100k boat using 15gph and 100 hours a year, you would have to hand over to the buyer the boat for nothing .. he could then invest the 100k with a 5% a 5% after tax yield and the income would pay for the extra fuel.
So in a closed market the effect is dramatic.
Now bring in Europe, prices in the UK DROP, people from Europe start buying but on many boats with a values from 60k to 100k when dropped, allowing for transport costs etc the differential in price would have to be considerable.
The power boat demand by doing away with the UK market would have decreased as a whole - then any boats that get sold to Europe are sold cheaply increasing the baot stock in Europe and reducing it here. The net result is a stabalised market - no UK cruising powerboats in any number left.
The market uses the cheaper in UK signal to trigger buying here those folks are selling cheaper however this does not increase prices, it simply empties the UK.
There is no real market between many Med countries and the UK in the sub £100k market because the costs are so high in changing countries. In practice there are hurdles between tyhe countries based on a number of practical factors.
The German tax authorities got strict and hit the german owned power boat market in Turkey - result was that Turkey prices were and are low but so are the obstacles in getting a boat from Turkey to the UK.
Markets are not weel behaved, perfect mechanisms.
This debate is all based upon your statement that the UK market has already discounted the price of boats to allow for £1 per litre diesel. That is clearly not the case ...
"2. Why do 6-7yr old Med boats suddenly depreciate relative to UK ones? Dont understand this at all"
With the costs of med berths etc the attention in the med, I am told, is much more to the larger newer boats.
"3. The fact is that the market forces are not yet strong enough but I'd be surprised if some forward looking boat builders (eg Sealine) are not at least looking at different hull forms in order to improve speed and fuel efficiency"
I am a chartered engineer and I can tell you that the above is always the case - everyone is always looking to improve but the drag from a 1996 Sealine is probably about the same as from a 2004 Sealine ... you can only go so far, just as you can with car shapes, then improvements are in tiny, if any , steps.
". What the hell has the weather got to do with the price of anything? and I dont know where this £1/litre comes from. I pay about 88p/litre for road diesel for my car so 70p/litre for marine diesel is a perfectly valid comparison, its certainly a hell of a lot different to 28p/litre"
The £1 a litre comes from your statement which I asked you to clarify at the beginning of the debate on this thread
No the 70p per lite is not valid in the context you explained it in.
I was using your figure of £1 per litre that you claimed UK boat prices had already been discounted to. This is almsot 50% more than 70 p per litre and that is significant.
"No, I would'nt think that it tips it in favour of the Med because, even at 70p/litre, fuel is still a relatively small part of the cost of running my boat there. I certainly spend more on marina charges, maintenance and air fares than on fuel. The costs of running a boat in the Med are generally higher than the UK, certainly enough to outweigh the difference in fuel cost if red diesel goes"
You already made the decision that all factors combined its better to base your boat in the Med than in the UK. Now all I am saying is that others come down in favour of the UK, a 300% to 400% fuel price hike would tip their balance in favour of the Med. Yes berths aetc are more expensive but tthe decision to go to the Med is based on many factors the weather being a big one.
For me it would tip the balance, but I am not alone.
"I will use about 6000litres of fuel this season so my fuel cost will be about £4200. If the UK price goes up to £1/litre, thats £6000 for fuel but the £1800 difference would not be enough to cover the additional cost of boating there. For a start, I probably spend about £5000 per season in air fares and car rental costs alone. So, I cant see a mass exodus to the Med happening "
You are comparing wrong things with wrong things. You should be comparing UK price now with the £1 per litre price that you claim our boats prices already allow for. So in practice its 300% to 400% more in fuel costs. All other factors, weather, berth price are in the equation already .. adding fuel price hike of such magnbitude will tip the balance for many.
However you are right about no mass exedos to the Med .. we agree. Those who cannot do it will simply get out of boating. They will have eben forced out.
The UK boatinf market is not based on boats like yours or mine, its based on a lot of much smaller boats and keen owners ... that is the bedrock of our pastime ... it is that bedrock that will be hit hardest and dissapear. They already sacrifice a lot to have a boat the fuel jike would see them leave boating.
<hr width=100% size=1>Paul
You are being too simplistic.
On the figures with a £100k boat using 15gph and 100 hours a year, you would have to hand over to the buyer the boat for nothing .. he could then invest the 100k with a 5% a 5% after tax yield and the income would pay for the extra fuel.
So in a closed market the effect is dramatic.
Now bring in Europe, prices in the UK DROP, people from Europe start buying but on many boats with a values from 60k to 100k when dropped, allowing for transport costs etc the differential in price would have to be considerable.
The power boat demand by doing away with the UK market would have decreased as a whole - then any boats that get sold to Europe are sold cheaply increasing the baot stock in Europe and reducing it here. The net result is a stabalised market - no UK cruising powerboats in any number left.
The market uses the cheaper in UK signal to trigger buying here those folks are selling cheaper however this does not increase prices, it simply empties the UK.
There is no real market between many Med countries and the UK in the sub £100k market because the costs are so high in changing countries. In practice there are hurdles between tyhe countries based on a number of practical factors.
The German tax authorities got strict and hit the german owned power boat market in Turkey - result was that Turkey prices were and are low but so are the obstacles in getting a boat from Turkey to the UK.
Markets are not weel behaved, perfect mechanisms.
This debate is all based upon your statement that the UK market has already discounted the price of boats to allow for £1 per litre diesel. That is clearly not the case ...
"2. Why do 6-7yr old Med boats suddenly depreciate relative to UK ones? Dont understand this at all"
With the costs of med berths etc the attention in the med, I am told, is much more to the larger newer boats.
"3. The fact is that the market forces are not yet strong enough but I'd be surprised if some forward looking boat builders (eg Sealine) are not at least looking at different hull forms in order to improve speed and fuel efficiency"
I am a chartered engineer and I can tell you that the above is always the case - everyone is always looking to improve but the drag from a 1996 Sealine is probably about the same as from a 2004 Sealine ... you can only go so far, just as you can with car shapes, then improvements are in tiny, if any , steps.
". What the hell has the weather got to do with the price of anything? and I dont know where this £1/litre comes from. I pay about 88p/litre for road diesel for my car so 70p/litre for marine diesel is a perfectly valid comparison, its certainly a hell of a lot different to 28p/litre"
The £1 a litre comes from your statement which I asked you to clarify at the beginning of the debate on this thread
No the 70p per lite is not valid in the context you explained it in.
I was using your figure of £1 per litre that you claimed UK boat prices had already been discounted to. This is almsot 50% more than 70 p per litre and that is significant.
"No, I would'nt think that it tips it in favour of the Med because, even at 70p/litre, fuel is still a relatively small part of the cost of running my boat there. I certainly spend more on marina charges, maintenance and air fares than on fuel. The costs of running a boat in the Med are generally higher than the UK, certainly enough to outweigh the difference in fuel cost if red diesel goes"
You already made the decision that all factors combined its better to base your boat in the Med than in the UK. Now all I am saying is that others come down in favour of the UK, a 300% to 400% fuel price hike would tip their balance in favour of the Med. Yes berths aetc are more expensive but tthe decision to go to the Med is based on many factors the weather being a big one.
For me it would tip the balance, but I am not alone.
"I will use about 6000litres of fuel this season so my fuel cost will be about £4200. If the UK price goes up to £1/litre, thats £6000 for fuel but the £1800 difference would not be enough to cover the additional cost of boating there. For a start, I probably spend about £5000 per season in air fares and car rental costs alone. So, I cant see a mass exodus to the Med happening "
You are comparing wrong things with wrong things. You should be comparing UK price now with the £1 per litre price that you claim our boats prices already allow for. So in practice its 300% to 400% more in fuel costs. All other factors, weather, berth price are in the equation already .. adding fuel price hike of such magnbitude will tip the balance for many.
However you are right about no mass exedos to the Med .. we agree. Those who cannot do it will simply get out of boating. They will have eben forced out.
The UK boatinf market is not based on boats like yours or mine, its based on a lot of much smaller boats and keen owners ... that is the bedrock of our pastime ... it is that bedrock that will be hit hardest and dissapear. They already sacrifice a lot to have a boat the fuel jike would see them leave boating.
<hr width=100% size=1>Paul
Gludy
Active member
Re: market forces, arbs form orderly queue here
The debate is about wether the UK boat prices reflect a £1 per litre fuel price already. Not 70p, not 80p not even 90p, what we are being told is that the market has discounted the UK boat price to allow for £1 per litre.
I dispute that and think that it is off the radar for most people. The very fact that not only you upgraded but other people I know upgraded demonstrates that it is off the radar.
I also agree that the bulk will not export their boats .... in fact the bottom will fall out of the bottom end of the cruising market because it would take so much money, more than the boat is often worth, to discount for the fuel price hike.
Nor do we have a perfectly fluid market - in practice for the smaller boats we are really talking about France as the overseas market.
However, as stated, the debate is about the market already having allowed for the £1 per litre fuel hike in today's boat prices..... no way has it done that. In fact I think so far it has not allowed for any hike at all. Gradually it will become frozen in the headlights of the EU directive as the time gets nearer and just like the housing market, no one will be buying or selling..... just waiting to see....
<hr width=100% size=1>Paul
The debate is about wether the UK boat prices reflect a £1 per litre fuel price already. Not 70p, not 80p not even 90p, what we are being told is that the market has discounted the UK boat price to allow for £1 per litre.
I dispute that and think that it is off the radar for most people. The very fact that not only you upgraded but other people I know upgraded demonstrates that it is off the radar.
I also agree that the bulk will not export their boats .... in fact the bottom will fall out of the bottom end of the cruising market because it would take so much money, more than the boat is often worth, to discount for the fuel price hike.
Nor do we have a perfectly fluid market - in practice for the smaller boats we are really talking about France as the overseas market.
However, as stated, the debate is about the market already having allowed for the £1 per litre fuel hike in today's boat prices..... no way has it done that. In fact I think so far it has not allowed for any hike at all. Gradually it will become frozen in the headlights of the EU directive as the time gets nearer and just like the housing market, no one will be buying or selling..... just waiting to see....
<hr width=100% size=1>Paul
jfm
Well-known member
confused about the £1 figure
"Not 70p, not 80p not even 90p, what we are being told is that the market has discounted the UK boat price to allow for £1 per litre"
Who are we being told this by?
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"Not 70p, not 80p not even 90p, what we are being told is that the market has discounted the UK boat price to allow for £1 per litre"
Who are we being told this by?
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Gludy
Active member
Re: confused about the £1 figure
YOU!!!!
in an earlier post you wrote:-
"So if it's common knowldge (with say 80-90% certianty) that diesel will rise to say £1 litre from 2006 (or whenever), then surely any price impact will exist already, wont it?"
I responded seeking clarification and you clarified.
The debate then became:-
You claimed that the market had already discounted prices to this level.
I claimed it had not.
I even queried you on the level asking how could you assume the outcome at full road price of £1 per litre (which would be £1 per litre for marine with the same tax as road because marine use has to charge more because of the low scale of operation)
My early debating points were about why you would assume the full hike instead of another level such as EU average price etc.
Please read the thread
<hr width=100% size=1>Paul
YOU!!!!
in an earlier post you wrote:-
"So if it's common knowldge (with say 80-90% certianty) that diesel will rise to say £1 litre from 2006 (or whenever), then surely any price impact will exist already, wont it?"
I responded seeking clarification and you clarified.
The debate then became:-
You claimed that the market had already discounted prices to this level.
I claimed it had not.
I even queried you on the level asking how could you assume the outcome at full road price of £1 per litre (which would be £1 per litre for marine with the same tax as road because marine use has to charge more because of the low scale of operation)
My early debating points were about why you would assume the full hike instead of another level such as EU average price etc.
Please read the thread
<hr width=100% size=1>Paul
jfm
Well-known member
Re: confused about the £1 figure
Read the thread you say? I dont think I have ever proferred £1 as a definitive figure. When I first said it, I said "say £1". It might be telling you how to suck eggs but the word "say" means the £1 number is an example, a bit of a guess, just to make a point of principle. It means the £1 is not put forward as a precise figure.
Then I noticed (correctly as it now turns out) you seemed to think my £1 was a hard and fast number so in my next-but-one post said "I dunno if it will be £1 or whatever, just using that number as an example".
Sorry to confuse, the £1 is not a scientific number. It is just meant to represent a number significantly higher than today's fuel cost. As it happens it's broadly where I expect fuel price to be in a few years, but that's just my personal guess, not necessarily the market-average guess as a whole
I dont know what the market-average view of 2006-7-8 dockside fuel prices is, neither does anyone else, but I'd guess it is in the region of a 3x ish multiple of today's price
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Read the thread you say? I dont think I have ever proferred £1 as a definitive figure. When I first said it, I said "say £1". It might be telling you how to suck eggs but the word "say" means the £1 number is an example, a bit of a guess, just to make a point of principle. It means the £1 is not put forward as a precise figure.
Then I noticed (correctly as it now turns out) you seemed to think my £1 was a hard and fast number so in my next-but-one post said "I dunno if it will be £1 or whatever, just using that number as an example".
Sorry to confuse, the £1 is not a scientific number. It is just meant to represent a number significantly higher than today's fuel cost. As it happens it's broadly where I expect fuel price to be in a few years, but that's just my personal guess, not necessarily the market-average guess as a whole
I dont know what the market-average view of 2006-7-8 dockside fuel prices is, neither does anyone else, but I'd guess it is in the region of a 3x ish multiple of today's price
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oldgit
Well-known member
Have been to look at a couple of P45s in the last month and think you will get a lot of boat for the money.However the condition of the two boats we went to look at were like chalk and cheese.One had obviously been enjoyed cherished and used extensively by its owner,the other a sad neglected derelict(PM for location).The price difference was only about 15% twixt the two.Personally would not go for cramped claustrophobic max cabin version( scruffy one).The fact I have been even looking to buy a larger boat could be an indication that at this section of the market some of us will be happy to endure/forums/images/icons/laugh.gifpottering about at less than 30 GBH,in order be able to afford to run this type of craft.
For less money the classic earlier shape 414 will give the sort of space you need.
An older but well fettled boat will give more fun than a neglected newer one,which spends all its time on blocks outside the shed of the local mender while waiting for the latest barrow load of your money to arrive.
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For less money the classic earlier shape 414 will give the sort of space you need.
An older but well fettled boat will give more fun than a neglected newer one,which spends all its time on blocks outside the shed of the local mender while waiting for the latest barrow load of your money to arrive.
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Gludy
Active member
Re: confused about the £1 figure
I really did seek clarification of the £1... and got it, but never mind.
So lets ask again:-
So if the boat prices today are discounted to reflect the fuel price hike, what fuel price do they reflect?
<hr width=100% size=1>Paul
I really did seek clarification of the £1... and got it, but never mind.
So lets ask again:-
So if the boat prices today are discounted to reflect the fuel price hike, what fuel price do they reflect?
<hr width=100% size=1>Paul
D
Deleted User YDKXO
Guest
OK, enough already. You can lie awake at night fretting about the price of diesel and the value of your boat. Personally, I'll sleep soundly not worrying about it
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Gludy
Active member
Ok enough.
I am not lying awake or fretting. I just do not want to encourage complacency nor the beleive that somehow a price hike of 300% ot 400% will not effect the price of UK crusing boats.
<hr width=100% size=1>Paul
I am not lying awake or fretting. I just do not want to encourage complacency nor the beleive that somehow a price hike of 300% ot 400% will not effect the price of UK crusing boats.
<hr width=100% size=1>Paul
ari
Well-known member
"This year because of weather and a family illness I only used about £2500 worth.
Next year I estimate I will use about £4k to £5ks worth.
I pay low prices for diesel and so if the price went o £1 per litre multiply the above figures four fold.
Extra cost say about £12k. this at 5% equates to a capital sum of £240k.
So if i knocked £240k off the price of the boat and the buyer invested the 240k with a 5% after tax yield he would pay the same as I pay now for my boating!!!!"
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So what we're tallking about is a particularly heavy user with a 1/2 million pound boat who's already shelling out £5K having to find another £15K.
Or boat a bit less if that smarts.
And that somehow knocks (according to your figures) half the value out of the boat??
Err, rightio...
:-S
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Next year I estimate I will use about £4k to £5ks worth.
I pay low prices for diesel and so if the price went o £1 per litre multiply the above figures four fold.
Extra cost say about £12k. this at 5% equates to a capital sum of £240k.
So if i knocked £240k off the price of the boat and the buyer invested the 240k with a 5% after tax yield he would pay the same as I pay now for my boating!!!!"
----------
So what we're tallking about is a particularly heavy user with a 1/2 million pound boat who's already shelling out £5K having to find another £15K.
Or boat a bit less if that smarts.
And that somehow knocks (according to your figures) half the value out of the boat??
Err, rightio...
:-S
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ari
Well-known member
"The effect of this fuel increase, had it been factored into boat prices would be large!
Take a much smaller boat costing say £100k, 100 hours a year at say 15 gallons an hour = 1500 gallons.
At my prices now this equates to about £1875, estra cost would be £5625 so you would need to knock £112,500 off the price of a boat to compensate!!! Thats worth more than the boat!!!!
Even at a 300% (as opposed to 400%) increase the value of the boat becomes almost zero.
These price factors have not been factored into todays boat prices!!!!"
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I'm sorry, non of this makes any sense!
For a start, a £100K boat (say a Targa 34 Fairline) will only use 15 gallons an hour at fast cruising speed. How is every minute spent with the engines running manage to be at 25 knots? Must make for interesting berthing!
And how does the running cost going up a bit instantly make the boat worthless?
I'm sorry, but this is totally pie in the sky.
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Take a much smaller boat costing say £100k, 100 hours a year at say 15 gallons an hour = 1500 gallons.
At my prices now this equates to about £1875, estra cost would be £5625 so you would need to knock £112,500 off the price of a boat to compensate!!! Thats worth more than the boat!!!!
Even at a 300% (as opposed to 400%) increase the value of the boat becomes almost zero.
These price factors have not been factored into todays boat prices!!!!"
---------------
I'm sorry, non of this makes any sense!
For a start, a £100K boat (say a Targa 34 Fairline) will only use 15 gallons an hour at fast cruising speed. How is every minute spent with the engines running manage to be at 25 knots? Must make for interesting berthing!
And how does the running cost going up a bit instantly make the boat worthless?
I'm sorry, but this is totally pie in the sky.
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Gludy
Active member
Running cost are critical and capital is fairly cheap. What I gave was a calculation for my boat and one for a £100k boat.
Someone with a 100k boat say doing 100 hours with current red diesel prices after the price hike to full road fuel level would have to give the seller a £100k to invest to pay for the increase in fuel price alone.
Are they are particualry heavy user?
Do they have a very expensive mobo cruiser?
Take someone working hard to keep a 30 foot cruiser going that costs say £70k. They again would have to give the whole 70k away to have the same running costs - put another way if a buyer can just afford today's running costs of a 70k boat then after the hike they would need to have the boat given to them free, then invest the 70k they were going to pay for it, and still have the same running costs as the previous owner!
These are just logically derived figures - tell me where I am going wrong?
The bottom level entry point in the market would collaspe because many who would have tied out boating will simply not be able to stretch that far and afford it.
I look forward to you explaing where my logic is flawed.
<hr width=100% size=1>Paul
Someone with a 100k boat say doing 100 hours with current red diesel prices after the price hike to full road fuel level would have to give the seller a £100k to invest to pay for the increase in fuel price alone.
Are they are particualry heavy user?
Do they have a very expensive mobo cruiser?
Take someone working hard to keep a 30 foot cruiser going that costs say £70k. They again would have to give the whole 70k away to have the same running costs - put another way if a buyer can just afford today's running costs of a 70k boat then after the hike they would need to have the boat given to them free, then invest the 70k they were going to pay for it, and still have the same running costs as the previous owner!
These are just logically derived figures - tell me where I am going wrong?
The bottom level entry point in the market would collaspe because many who would have tied out boating will simply not be able to stretch that far and afford it.
I look forward to you explaing where my logic is flawed.
<hr width=100% size=1>Paul
Gludy
Active member
"For a start, a £100K boat (say a Targa 34 Fairline) will only use 15 gallons an hour at fast cruising speed. How is every minute spent with the engines running manage to be at 25 knots? Must make for interesting berthing!
Ok say the boat averages 12 gph then 100 hours is 1200 gallons
So what the point is that after the hike the costs increases by a factor of 3 or 4 giving the running costs of 300 to 400 hours and the capital sum you need to invest to pay this extra cost is of the order of the value of the boat and in a number of cases exceeds the value of the boat.
"And how does the running cost going up a bit instantly make the boat worthless?"
Fuel going up 300% to 400% is not going up a bit. For many people doing 100 hours a year and spending say £1500 on fuel having to find another £4,500 is crippling.
let me try an explain this another way:-
Two boats idential in all respects but one uses four times as much fuel.
Fuel use is just say £1000 p.a. for one and so £4000 p.a. for the other.
Both ask the same price, say £60,000/
Anyone with sense would purchase the one that uses the £1000 p.a. in fuel.
So how much would the second boat have to drop to compensate for the extra £3000 p.a. running cost?
Well, if he asked £30,000 for it instead of £60,000 and you invested the saved £30,000 you would noy get more than £1500 p.a. from the interest so this would not make up for the extra running cost. In fact you would have to be given the boat free and invest the whole of the saved £60k to get the £3000 p.a. difference.
So in this case factoring in the price of the fuel hike does away with the price of the boat!!!!
"I'm sorry, but this is totally pie in the sky."
No its simply the financial facts behind the factoring in on a simple logical basis - in practice you would be hard put to get 5% return after tax so I am being generous!!
If you disagree please explain why.
<hr width=100% size=1>Paul
Ok say the boat averages 12 gph then 100 hours is 1200 gallons
So what the point is that after the hike the costs increases by a factor of 3 or 4 giving the running costs of 300 to 400 hours and the capital sum you need to invest to pay this extra cost is of the order of the value of the boat and in a number of cases exceeds the value of the boat.
"And how does the running cost going up a bit instantly make the boat worthless?"
Fuel going up 300% to 400% is not going up a bit. For many people doing 100 hours a year and spending say £1500 on fuel having to find another £4,500 is crippling.
let me try an explain this another way:-
Two boats idential in all respects but one uses four times as much fuel.
Fuel use is just say £1000 p.a. for one and so £4000 p.a. for the other.
Both ask the same price, say £60,000/
Anyone with sense would purchase the one that uses the £1000 p.a. in fuel.
So how much would the second boat have to drop to compensate for the extra £3000 p.a. running cost?
Well, if he asked £30,000 for it instead of £60,000 and you invested the saved £30,000 you would noy get more than £1500 p.a. from the interest so this would not make up for the extra running cost. In fact you would have to be given the boat free and invest the whole of the saved £60k to get the £3000 p.a. difference.
So in this case factoring in the price of the fuel hike does away with the price of the boat!!!!
"I'm sorry, but this is totally pie in the sky."
No its simply the financial facts behind the factoring in on a simple logical basis - in practice you would be hard put to get 5% return after tax so I am being generous!!
If you disagree please explain why.
<hr width=100% size=1>Paul
