A collapse in world oil prices will mean good news for Canadian motorists heading into the Christmas season, with one petroleum analyst saying gas prices will plummet this weekend.
Oil prices have dropped about 35 per cent from mid-summer highs because of a higher U.S. dollar, lower demand and most particularly a glut of global supply.
While the price drop has led to losses on the Toronto stock market and concerns for provincial budgets in Alberta, Saskatchewan and Newfoundland and Labrador, it's forecast to bring relief to Canadians filling up at gas stations.
Dan McTeague, a former Liberal MP and founder of price-tracking and forecasting website TomorrowsGasPriceToday.com, said oil prices tend to suggest where gasoline is going to go, often within 48 hours. That's on top of prices that typically go down in the fall anyway.
McTeague's website shows gas prices dropping across the country. Prices listed in cents per litre on the site at mid-day Friday included:
- Vancouver: 124.9
- Edmonton: 91.9
- Calgary: 98.9
- Regina: 102.9
- Winnipeg: 99.4
- Toronto: 113.9
- Ottawa: 102.9
- Montreal: 116.4
- Fredericton: 109.9
- Halifax: 115.9
- Charlottetown: 116.9
- St. John's: 115.4
The website's seven-day forecast for all these cities predicted a 100 per cent chance prices will go down.
On Friday, the price of U.S. benchmark crude — used to make gasoline and other products — is down by more than a third since the summer and closed down a whopping $7.54 at $66.15 US a barrel..
"Those savings will make their way through the economy and lower costs," including lower taxi fares, McTeague said.
He expects prices to stay low until late winter or early spring.
However, energy analyst Roger McKnight of En-Pro International cautions there are some factors working against lower fuel prices for consumers, such as the falling Canadian dollar.
Specialist Michael Gagliano, left, who handles energy stocks, works with traders on the floor of the New York Stock Exchange. U.S. stocks indexes were mixed in early trading. (Richard Drew/Associated Press)
The loonie lost 0.84 of a cent to 87.41 cents US, on top of a 0.75 of a cent slide Thursday, even as Statistics Canada reported that third-quarter gross domestic product ran ahead at an annualized pace of 2.8 per cent. That was much higher than the 2.1 per cent rise that economists had expected.
McKnight adds that as oil companies make less money producing oil, they will likely look to boost refining margins.
In Calgary, Alberta Premier Jim Prentice told a business audience there are no simple solutions for the revenue shortfall that will result from plummeting oil prices.
Prentice said Alberta can't just wait for high prices to return.
Government spending will have to be watched closely, the premier said, and there will be an effect on Albertans.
But he also said there will be no sales tax and Alberta's low tax regime will continue.
In Newfoundland and Labrador, Premier Paul Davis said Friday — a day after freezing discretionary spending — that he's not worried about oil's long-term future, but that the decline has forced his government to save money.
"Our budget was set at $105 [US a barrel] this year, [so] every time the oil drops below that, it causes problems for our budget," he told CBC News.
Meanwhile, the Toronto stock market extended its losses Friday as energy stocks continued to sell off.
The S&P/TSX composite index dropped 177.74 points or 1.19 per cent to 14,744.70, with the energy sector down 2.25 per cent.
U.S. stocks ended mostly lower in a holiday-shortened session.
The Standard & Poor's 500 index eased five points to close at 2,067 Friday.
The Dow Jones industrial average rose less than a point to close at 17,828. The Nasdaq edged up four points to 4,791.
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