Watching the Fuel Gauge
At the Steamship Authority so much fuel is used to send ferries back and forth on their frequent schedule that even small changes in the price of oil can translate over time into significant savings, or expense.
To that end Falmouth governor Robert S. Marshall is right to sound a note of caution about where fuel prices may be heading in the coming year.
Boat line staff has forecast that oil will cost about seventy dollars per barrel in the current year, about ten dollars less than current prices.
At present, the change of a dollar in the basic price of crude oil translates into about one hundred thousand dollars in the boat line fuel budget. At those levels, a ten-dollar increase means an increase of one million dollars.
The draft budget examined last week by the governors does not include any fare increases.
Indeed, despite general concerns on the Vineyard and beyond about a softening economy, the boat line appears to be doing well, and much of the credit for this goes to general manager Wayne Lamson for his sound, conservative management practices. Through the first seven months of the year, the boat line showed a net gain of about three million dollars; this is expected to increase when the August figures are totaled. Treasurer Robert Davis is confident that the boat line can absorb an anticipated rise of three million dollars in operating expenses next year without raising rates.
But even with that cushion, Mr. Davis acknowledges cash flow may be inadequate at times to meet expenses.
Fuel remains a major wild card in any Steamship Authority budget. In a volatile world, where the appetite of the United States for imported oil continues to grow, the oil market can cause large headaches in otherwise tightly planned budgets.
Ensuring an adequate financial cushion is prudent. Mr. Marshall suggested the use of a fuel surcharge if necessary, a tactic used by carriers such as airlines and one of the boat line’s private ferry competitors, Hy-Line.
Managers are examining other ways to hold down fuel costs, including running fewer freight boat trips and slowing ferries while still making the schedule. Mr. Davis will recommend fare increases only as a last measure.
Boat line governors, who have the final say on finances, are wise to insist on a budget that errs on the side of caution.
Taking extra care now can forestall any budget squeeze in the coming year.