Drivers across the country are keeping more money in their pockets after filling up a tank of gas.
According to Gas Wizard, a website that tracks gas prices in Canada, the national average for a litre of gas on Sept. 6 was $1.49, compared with $1.71 on the same day last year.
Dan McTeague, president of Canadians for Affordable Energy and the site operator for Gas Wizard, says several factors are contributing to the price drop at the pump.
“Crude prices are almost down $20 a barrel, year over year. And what does that mean? There’s 159 litres of gasoline usually produced from every barrel of oil, so that $20 is pretty significant,” said McTeague.
There also haven’t been any geopolitical or weather events severe enough to impact supply, he notes, and energy markets are not convinced there is a surge in demand, nor are they concerned about the supply.
“China and the United States haven’t been really looking at fundamentals like supply, which is tightening, and demand, which is remaining robust. Instead, they are concerned about things like interest rates, and concerned there may be another slowdown economically around the corner,” said McTeague.
“And it’s really that that’s keeping prices in check, if you will.”
Ian Lee, an associate professor of business at Carleton University in Ottawa, says any time the price of crude is low, the energy industry will be “watching with heightened scrutiny”.
As well, governments have taken in the variability of the price of crude into their budgetary planning.
“It’s not going to have an immediate impact on the economy,” he said. “It’s not that the corporations are going to suddenly say, ‘Okay, that’s it: We’re slashing our workforce.’”
Moshe Lander, an economics professor at Concordia University in Montreal, says drivers may enjoy savings now, but they may be short-lived.
“In Atlantic Canada, where they’re using heating oil, and in Alberta, where we’re using natural gas to fuel a lot of our homes, this is the type of thing that whatever reprieve you’re getting now might very easily be clawed back in an early winter,” said Lander.
Experts say the price of gas will drop another six cents across the country when the summer blend of gas is replaced with the winter blend.