Late last month the fuel surcharge on ferry fares hit 18.6%. That’s $2.40 for every car and $.90 for every passenger in or out of a car. Commuter tickets now cost $17.85 for a car and driver. A family of four out for a Sunday visit are now paying over $40.00 for the ferry. This is almost 25% higher than just a year ago. It’s probably a good time to ask whether this price is justified, what overall impact it is going to have on the island and if there are any creative ways to work around it.
First, the price: We are told that our ferry burns 7,500 litres of fuel each day. We are further told that the price of that fuel has doubled over the past few years. Since it now costs about $100 per barrel or $.66 per litre the extra cost would be about $900,000 per year. Based on last year’s passenger numbers, they will collect about $1,200,000 this year from the surcharge. Presumably the difference is to pay for the fuel increases before the surcharges caught up.
One of the assumptions made in calculating the surcharge was that passenger loads would not go down. With a price increase this large you have to wonder at that. The normal rules of economics are quite straightforward on this one. When there is no possibility of increased supply, the provider of the service charges “whatever the traffic will bear”. The trick is to match the price with the capacity of your service. It has been argued that our ferry is too small for our route. That is true only at the price at the time that the assessment was made. A price increase of 25% should almost certainly decrease demand.
This is where it starts to feel like we’re living in the middle of a social engineering experiment. The first obvious consequence of such a large and sudden increase is that it will discourage working class commuters. It will now cost $4,500 per year to commute in a car. That’s equal to the payments on a mortgage of $65,000. People considering moving to Bowen (or contemplating leaving) look very closely at numbers like this. That means that this fare increase may lower your property value. The flip side of that one is that we now have a lot of people who commute to Bowen for work. This may tempt them to move here.
One positive effect could be a decrease in ferry overloads. One would assume that more commuters will carpool and take transit. Since it will be at least a couple of years before we see a bigger boat this would be the perfect time to reduce fares substantially for smaller cars. The current price is for cars up to 20 feet long. What if they reduced the fare by $5.00 for cars under 12 feet long. Maybe the $100 per month saving would entice more commuters to go for really small cars. Because more cars would fit on the boat there shouldn’t be any net loss of revenue for the ferry.
The combined effect of the gas station re-opening and ferry fares going up could be a real boost for local retailers. It’s going to get harder to justify a quick trip to town to pick up a few things when the combined cost of ferry and gas gets close to $30.00. At least that’s what us local retailers would like to think.
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