What Happens if Gas Prices Stay High? A Comparison with the Automotive Industry

Photo - Prairie Creek Marina

What happens if gas prices stay high? We discuss how recreational boating could adapt over the next 6-12 months.

Boaters are feeling the strain of higher gas prices as they launch for the 2026 summer season.

While the boating industry has faced fuel shocks before, what makes this season different is higher fuel costs are arriving at a time when consumers are already wrestling with higher borrowing costs, inflation, rising marina fees, insurance increases, and expensive maintenance charges. Higher gas prices alone generally do not stop people from boating, but when coupled with these other factors, it could change how they boat.

If higher fuel costs stick around through the summer and into 2027, the recreational boating industry, and its boaters, may want to turn to the automotive industry for answers.

Here's why:

The automotive and recreational boating industries are uniquely intertwined in North America. Both produce large-scale oil-based products with a significant influence on the Canadian and U.S. economies. The automotive industry leads the charge with a $1.5 trillion annual economic impact in the U.S. compared to the boating industry's $58 billion annual input. The automotive industry is, in many ways, a leading indicator for what may lie ahead for boaters over the next 6-12 months.

Historically speaking, when fuel prices rose sharply in the automotive industry, consumers shifted away from larger, fuel-hungry vehicles and began prioritizing efficiency to a greater degree. If there is a correlation between the two industries, any behavioral changes on the asphalt may soon be mirrored on the water. That doesn't mean doom and gloom, but rather a shift in consumer mindset. Necessity is the mother of invention. Hope is not lost.

So, what could that look like for boaters?

Boaters Might Change Habits but They Won't Quit

Consumers don't generally abandon transportation when fuel prices rise. Instead, they adapt. When fuel prices hit record levels, like during the 1973 OPEC oil embargo (which caused the automotive industry's 'malaise era' and the introduction of foreign automakers into the U.S. market), the 1979 Iranian Revolution, the 2008 financial crisis, and the COVID-19 pandemic, automotive buyers fell under pressure to move away from full-size SUVs and trucks towards smaller vehicles like midsize SUVs, compact crossovers, and sedans. A similar pressure is happening right now: the conflict in Iran and the Strait of Hormuz is pushing global oil markets into disarray.

The next time you're driving on the highway, take note of the popularity of midsize SUVs and 'crossovers' (think Honda CRV, Toyota RAV4, Chevrolet Equinox, Kia Telluride, Ford Escape, Hydunai Santa Fe). These smaller and more efficient designs replaced the 'SUV era' of the 90s and early 2000s with smaller frames, improved fuel mileage, and an increased focus on efficiency and adaptability. Since 2008, sales of hybrids and electric vehicles (of which the CRV and RAV4 both have a popular hybrid option) have also found a home in the market. The Nissan Leaf was the first mass-produced all-electric vehicle, released in 2011, and in the years since we've watched EV's go from foreign pariah to domestic mainstream transportation. That being said, the North American economy has seemingly hit its plateau for electrification under the current conditions. The domestic market for electric vehicles remains strong (Tesla is currently trading around $442 per share and has a $1.6 trillion market cap), but gas-burning vehicles aren't going away, either. There is room for both. Both sides are satisfying a demand while consumers search for the proverbial 'happy medium.'

To drive the point home, in March the American investment bank Morgan Stanley picked General Motors (GM) as the best choice among automakers to ride out the current wave of increased oil prices. It seemed counterintuitive at first glance when Morgan Stanley started by saying, "every $1-per-gallon increase in gas prices results in a $450-per-year increase in fuel costs for gas-powered vehicles, assuming 27 mpg and 12,000 miles driven per year. Electric vehicles really become a much more cost-effective option if gas prices rise to $4 per gallon. At that point, EV fuel costs are 60% lower annually than those of their internal combustion engine brethren, so consumers looking to buy a new car may opt for an EV rather than a fuel-guzzling SUV."

While that's a very pro-EV statement, consumers have already taken notice of the higher up front costs of an electric vehicle, the risks of expensive battery replacements, and the realities of intermittent infrastructure. Morgan Stanley noticed, too. They cited GM's "strong operational execution, tighter capital discipline, large-scale share repurchases, and a shift toward higher-margin trucks and SUVs amid supply chain realignment" as reasons for their confidence in a North American gas-powered automaker. They also said "renewed U.S. manufacturing investment, and an ongoing EV slowdown that may temporarily favor its gasoline and hybrid lineup" would help see GM through the turmoil. For some added perspective about EV's and gas-powered vehicles balancing the market, Ford bet heavily on an EV-dominant future and lost a staggering $20 billion from its electrification investments. Ford stock currently sits around $16 per share against GM's $84 per share, as of May 28th. Meanwhile, GM led the U.S. auto industry in sales in 2025, selling 700,000 vehicles with a starting price below $30,000, and was the second-leading EV seller behind Tesla in the U.S.

So, there's room for both electric and gas vehicles, and both will continue tweaking their formulas to maximize efficiency, adaptability, and value. Gas-powered vehicles still anchor the market, and consumers believe in their viability, even if their frame sizes grow or shrink depending on the economic forecast.

Something similar may happen in boating.

Adapting Their Boating

https://www.youtube.com/watch?v=cNyIH2CWxR0

According to CTV News Ottawa, boaters still hit the water for the May Long weekend despite gas prices hovering around $1.90 per litre, but the signs of adapting consumer behavior were already obvious. Boaters said they're changing how they use their boats instead of giving them up entirely. They mentioned taking shorter trips, using slower cruising speeds, or going on fewer long-distance outings to keep their costs in check.

“I love today, today’s boat day,” Steve Ellis told CTV News. “You don’t plan for life, but you have to make the most of it... The gas prices are higher, we’ll expect to pay a little bit more this year, but it’s going to be part of the fun.”

Then Ellis said he's dealing with high gas prices by sometimes filling up his boat at regular gas stations. “It’s a little bit more expensive on the river,” Ellis said. “Sometimes, I’ll bring it to gas stations to fill it up. I get some looks, and I take a little bit of time to fill it up, but once it’s full, it’s good for about half the season," he said.

Adapting.

The North American Marine Manufacturers Association says it's hopeful the worst may be over as 2026 settles in. New powerboat sales were down about 10% in 2025, but the decline did not affect every segment in the same way. The 10% drop is also just for new boat sales and does not reflect the used market, which typically picks up some of the slack when new unit sales come under pressure.

“The pressure is most evident in entry-level segments, where financing costs have the greatest impact," said NMMA President & CEO Frank Hugelmeyer to Boating Industry in January. “That said, enthusiasm for life on the water remains resilient. Boat usage, club memberships and shared ownership models continue to hold relatively steady, showing that Americans still value the wellness, connection and freedom that boating provides, even if they’re delaying major purchases.”

The 2025 NMMA Annual Report says that "(a)mong new boat segments, freshwater fishing boats showed the greatest stability" with only a 1.5% drop in new sales compared to 10% for many other segments. The report also stated "the recreational boating market is entering the year in a relatively balanced position following the demand surge earlier in the decade. While new boat sales moderated in 2025, steady participation levels and multiple pathways to boating continue to support the long-term outlook for the industry."

The NMMA's February consumer confidence report says "the data suggests consumers have not abandoned large purchases but are being more deliberate about where and how they commit, gravitating toward value-oriented options and selectively upgrading rather than broadly expanding spending."

In other words, adapting.

Sizing Shifts

If the automotive industry is an indicator for what lies ahead, medium-to-large recreational boats may have to adjust while smaller, more efficient models may gain momentum. History suggests consumers will be ushered towards smaller designs with a more adaptive footprint, or larger designs with a greater focus on fuel-efficiency. Dealers have historically shifted inventory and marketing strategies accordingly.

This could mean a greater demand for runabouts, aluminum fishing boats, pontoons, PWCs, and other small to midsize craft. It could also mean changes to center consoles, cruisers and small yachts as manufacturers adopt new technology to improve efficiency and reduce cost of ownership without affecting size. It's worth noting that Volvo Penta just released its first hybrid propulsion system for yachts and Sharrow Marine partnered with Ford Motor Co. to improve production capacity for their ultra-efficient propellers. Another trickle down effect could be the greater adoption of outboards versus inboards due to their better fuel economy in small to midsize boats. Other potential changes could be more single-engine boats instead of twin or triple configurations, and a bump in service revenue at dealerships and marinas as boaters look to maintain and upgrade their existing vessel instead of upgrading. Another one of the unexpected lesson from automotive markets is that expensive operating costs sometimes strengthen used markets. When affordability has become strained before, consumers have typically opted to keep existing vehicles longer or buy used instead of new.

The same pattern could emerge in boating. And, if things settle down, it may all be temporary.

With 2026 settling in, the data suggests a cautious optimism. If fuel prices remain elevated for another 6-12 months, the result probably won't be fewer boaters. It will be boaters making different decisions. Economics drives consumer behavior, and right now high oil prices are driving up the cost of living, which in turn is putting pressure on the boating industry to find new ways to improve fuel efficiency, reduce manufacturing costs, and keep prices in line with consumer buying power. Boaters themselves are adapting by changing their habits, being mindful of overhead costs, and riding out the storm. With any luck, a period of geopolitical stability will give everyone time to find their footing. Boaters won't abandon their passion, they'll adapt to whatever keeps them on the water.

Because that's where we all want to be.

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